Markets fall on home sales drop

Stocks started higher, but that didn't hold. Dow is down 29, decliners over advancers almost 4-1 & NAZ fell 29. The breadth numbers have been getting higher in the 4 day sell-off. Bank stocks fell again taking the Financial Index to the lowest level since the start of Oct.

S&P 500 FINANCIALS INDEX

Value 192.97

Change -3.61

% Change -1.7%

The graph tells the story about the strange behavior of the index yesterday. Today it's back where it belongs, near its highs for the year even with a 4½ pullback to the 256s. The Dow Jones REIT Index fell 3. The VIX, volatilty or fear index, is up 1.44 to the 26s & sharply up from the 20 lows just a few days ago. Treasuries are in demand again, the yield on the 10-year Treasury bond dropped 6 basis points to 3.40%, still near 3½% level where it has been for several months.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks





Oil sold off on mixed signals about economic recovery (felt by the oil stocks) while gold resumed its upward climb.

CLZ09.NYM

...Crude Oil Dec 09

...78.18

... 1.37 .......(1.7%)

GCV09.CMX

...Gold Oct 09

...1,039.90

... 5.20 .......(0.5%)

Sales of new homes fell 3.6% in Sep to an annual rate of 402K from a downwardly revised 417K in Aug. Economists expected a 440K rate. This was the first decline since Mar. Sep sales were down 7.8% from last year. The median sales price of $205K was off 9.1% from a year earlier, but up 2.5% from $200K in Aug. Buyers may be worried that they won't be able to complete the deal before the Nov. 30 deadline to take advantage of a tax credit of up to $8K for first-time buyers. Congress is considering extending the tax credit through Mar & gradually phasing it out over the rest of 2010.

•New-Home Sales in U.S. Unexpectedly Fall as End of First-Time Credit Nears

New Home sales - 12 months





Petro China (PTR), the 2nd largest oil company in the world, had its net income drop 24% in Q3, worse than forecasts. It was hurt after oil prices fell & lower margins. However earnings may recover in Q4 as China’s economy leads the world out of recession.

•PetroChina's Third-Quarter Profit Falls 24% on Oil Price, Misses Estimates

Petro China --- 1 year




Markets keep sloshing around in earnings season, not encouraging for the bulls. The Petro China earnings weren't helpful. Conoco Phillips (COP) dropped 1.34 on a 70% plunge in earnings from low refinery margins & weak gas prices. The 2 Dow oils, Chevron (CVX) & Exxon Mobil (XOM), were off pennies on nervousness about their reports. Dow may not have an up month in Oct. NAZ has also been on defense this week.

One more sign of lingering troubles in the finance, GMAC Financial Services is in talks with the Treasury for a 3rd bailout. The gov already holds a 35% stake in GMAC after giving it $12.5B in bailout money.

Dow Jones Industrials --- 2 weeks




Nasdaq --- 2 weeks