Stocks Continue Sliding Toward the Weekend - TheStreet

Stocks Continue Sliding Toward the Weekend

Equities continue to fall following the latest homes-sales data for April and ahead of the long holiday weekend. All three major indices are tracking lower as crude oil climbs near a new record.
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Updated from 1:03 p.m. EDT

Stocks in the U.S. sank deep into the red Friday as investors dealt with a resuming climb in oil and abysmal home-sales numbers while unwinding their positions in front of long holiday weekend.

The

Dow Jones Industrial Average

was sliding 155 points, or 1.2%, to 12,470, and the

S&P 500

gave up 19 points, or 1.4%, at 1375. The

Nasdaq Composite

sank 28 points, or 1.1%, to 2437.

"This week was not terrific, so I think investors are looking to take money off the table ahead of the three-day weekend," said Paul Nolte, director of investments with Hinsdale Associates. U.S. markets will be closed Monday in observance of Memorial Day. "It's sell now and ask questions later," he said.

Earlier in the week, stocks were crushed in a huge two-day selloff as investors were jarred by new highs in oil and gloomy economic forecasts by the

Federal Reserve

. Equity measures rose a bit Thursday in recovery, but the session saw rather thin trading volume.

"We are seeing a little bit of a different dynamic in the market," said Nolte. "We're seeing more volume now on the market declines than on those advancing days, and certainly over the last four months or so, volume had been better on the advancing days."

That shift, he added, is not a good sign.

Helping to drag on the market Friday were crude-oil futures, which trended higher again following yesterday's brief reprieve from a stunning upward climb over the past few weeks. Crude hit a high near $134 earlier today, but later pared back its gains to 95 cents at $131.76.

Gold futures added $7.50 to $925.80 an ounce. The U.S. dollar was back on a downward track, losing 0.5% against the euro to $1.5779 and fetching just 103.24 yen, a 1.1% tumble from the prior settlement.

On the economic front, the National Association of Realtors said April's existing-home sales fell 1% from March to a seasonally adjusted annual rate of 4.89 million units -- a hair better than the economists' consensus, though also a 17.5% slide from a year earlier. Total inventory jumped 10.5% sequentially and should take 11.2 months, a 23-year high, to work through at the current sales pace. That's up from a 10-month estimate in March.

"With prices collapsing the incentive not to buy a home is increasing by the week, and with inventory showing no sign of improvement prices will keep falling," wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics. "Supply always rises in spring so the headline inventory numbers overdo the true position, but it is still bad."

On the corporate side in the new session, striking workers at

American Axle

(AXL) - Get Report

-- the main parts supplier to automaker

General Motors

(GM) - Get Report

-- voted to accept a new employment contract and return to work next week. The strike had lasted about three months and forced GM to idle several of its manufacturing plants.

Still, GM lost ground after the company said the strike is expected to bleed $1.8 billion out of pretax second-quarter earnings, having held back production on some 230,000 vehicles. Other work stoppages caused by finalizing local union agreements will spur a further $200 billion in pretax losses this quarter, said the company. Furthermore, GM expects "only a portion of this lost production will be recovered," considering the harsh economic environment and a market shift away from the sorts of vehicles the strike impacted.

GM shares were losing 5.1%, making it the Dow's worst-performing component recently, and American Axle gave up 4.2%.

Also,

CNBC

reported that

JPMorgan Chase

(JPM) - Get Report

, another Dow member, has laid off at least 200 investment-banking executives over the past couple of days, according to people at the firm. The network said the move was unrelated to JPMorgan's plan to make room for incoming

Bear Stearns

(BSC)

employees by cutting into its own staff.

in March JPMorgan agreed to take Bear out in a highly discounted

Federal Reserve

-backed deal, as the latter firm stood on the brink of collapse.

Shares of JPMorgan were down 2%.

In earnings, information-technology firm

CA

(CA) - Get Report

issued bullish full-year guidance prompted by a

30% leap in bookings

compared with last year, even as a tax charge dragged fiscal fourth-quarter results well below analyst estimates. Shares were climbing 3.8%.

Also, clothing retailer

Gap

(GPS) - Get Report

booked a

climbing profit

of $249 million, or 34 cents a share, but that fell short of the Street's consensus. Sales also slipped from a year earlier to a lower-than-expected $3.38 billion. Shares shed 1.6%.

Aeropostale

(ARO)

, another apparel seller, edged ahead of last quarter's bottom-line consensus as the company achieved sizable year-over-year gains in both earnings and revenue. The stock saw action on both sides of the flat line, and was recently up 1.1%.

As for notable analyst actions, Merrill bumped up

Apple's

(AAPL) - Get Report

price target to $215, and Goldman Sachs added the stock to its Conviction Buy List, as both analysts cited positive expectations for the tech giant's iPhone product. Shares ratcheted up 1.3%.

Morgan Stanley upped

Dell

(DELL) - Get Report

to overweight while cutting

Sun Microsystems

(JAVA)

to underweight. Credit Suisse, meanwhile, yanked

U.S. Airways'

(LCC)

rating down to underperform from outperform.

Dell shares were better by 1.6%. Shares of Sun were off 2.7%, and U.S. Airways plummeted 17.6%.

Treasury prices were rising Friday. The 10-year note rose 16/32 in price to yield 3.85%, and the 30-year bond jumped 25/32 in price, yielding 4.57%.

Markets abroad were mostly falling. The Nikkei 225 in Tokyo added 0.2% overnight, but the Hang Seng Index in Hong Kong slid 1.3%. Among European bourses, the FTSE 100 slumped 1.5% and Germany's Xetra Dax plunged 1.8%. The Paris Cac surrendered 1.9%.