Indexes slump as July home sales hit 15-year low

Indexes slump as July home sales hit 15-year low

As a result of a slow down in the real estate market, the indexes affecting interest rates, inflation, etc. are slumping.

This article can be found at: http://news.****/s/nm/20100824/bs_nm/us_markets_stocks

NEW YORK (Reuters) – Stocks fell more than 1 percent on Tuesday as sales of existing homes in the United States last month fell to a 15-year low, underlining growing concerns about the pace of economic recovery.

July U.S. existing home sales plummeted 27 percent, a drop that was twice as steep as expected, to an annual rate of 3.83 million units, far below the 4.7 million rate forecast by a Reuters poll of economists.

"Even after four years of declines, housing remains the key threat to the recovery," said Zach Pandl, an economist at Nomura Securities International in New York.

"The problem that pushed us into recession to some degree still remains. There's still imbalance in the housing market; too many homes and too little demand."

Homebuilders tumbled after the data. Beazer Homes USA Inc (BZH.N) dropped 2 percent to $3.49, and luxury homebuilder Toll Brothers Inc (TOL.N) lost 2.2 percent to $15.86.

The Dow Jones industrial average (.DJI) was down 109.97 points, or 1.08 percent, at 10,064.44. The Standard & Poor's 500 Index (.SPX) was down 12.33 points, or 1.16 percent, at 1,055.03. The Nasdaq Composite Index (.IXIC) was down 31.16 points, or 1.44 percent, at 2,128.47.

European and Asian stocks fell on prospects for an anemic global recovery, with the pan-European FTSEurofirst 300 (.FTEU3) index down 2.5 percent to its lowest intraday level since late July. Tokyo shares sank to a 15-month closing low amid mounting concern about government inaction over the strong yen, which touched a 15-year high against the dollar.

"I use the yen as a barometer of investor sentiment, and this shows how it continues to get increasingly negative," said Alan Gayle, senior investment strategist at RidgeWorth Investments in Richmond, Virginia.

Dell Inc (DELL.O) is preparing to sweeten its offer for 3PAR Inc (PAR.N), according to a Bloomberg report. The move comes a day after Hewlett-Packard Co (HPQ.N) bid $1.6 billion for the data storage company.

Shares of 3PAR gained 2 percent to $26.62 while Dell fell 3.4 percent to $11.53 and HP, a Dow component, slid 1.1 percent to $38.60.

Medical device maker Medtronic Inc (MDT.N) plunged 10 percent to $31.36 after it reported first-quarter revenue that fell from the prior year.

Discount retailer Big Lots Inc (BIG.N) posted second-quarter earnings that beat expectations by 1 cent a share. It also raised its 2010 profit view, but the stock slid 3.4 percent to $30.68.

The Dow and S&P are on track for their fourth straight day of losses, and both the S&P and Nasdaq are at their lowest point in seven weeks. The Dow is at its lowest level since July 20.

According to a late Monday report in the Wall Street Journal, at least seven of the 17 top Federal Reserve officials at the U.S. central bank's August meeting had reservations about the decision to buy more Treasuries.

"This gives you the feeling that the Fed is losing a bit of control, and along with the housing data only highlights how the economy is on a real slow track," said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.

(Additional reporting by Rodrigo Campos; Editing by Padraic Cassidy)