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Industry Information >>Agriculture>>Traders will examine a report on July new home sales

Traders will examine a report on July new home sales

Major U.S. stock indexes closed sharply lower in thin tradingMonday. The market was weighted down by losses in financial stocks,spurred by fresh worries surrounding troubled investment bankLehman Brothers (LEH) and giant insurer American InternationalGroup (AIG). The failure over the weekend of a Kansas-based bank,Columbian Bank and Trust, and market rumors of a hedge fund introuble, also gave investors pause, according to S&PMarketScope.

There was little immediate reaction to a report that U.S. existinghome sales rose 3.1% in July.

Bonds were surging as stocks fell. Bonds soared as stocks plunged.The dollar index rose, sending gold lower. Oil rose in volatiletrading.

On Monday, the Dow Jones industrial average finished lower by241.81 points, or 2.08%, to 11,386.25. The broader S&P 500index was off 25.36 points, or 1.96%, to end the session at1,266.84. The tech-heavy Nasdaq composite index dropped 49.12points, or 2.03%, to 2,365.59.

On the New York Stock Exchange, 24 stocks declined in price forevery seven that gained. The ratio on the Nasdaq was 22-6 negative.

Lehman Brothers' shares were under pressure after concerns a top South Korean regulator may derail the Korea Development Bank'spurchase of an interest in the bank.

AIG shares fell after the company, including its insurance andfinancial subsidiaries, was placed on "Rating Watch Negative" byratings agency Fitch Ratings. Also, Credit Suisse cut AIG's targetprice and EPS estimates.

Investors continued to anticipate the possibility that U.S.Treasury Secretary Henry Paulson will produce a federal bailoutplan for troubled mortgage-finance giants Fannie Mae (FNM) andFreddie Mac (FRE), according to S&P MarketScope. A governmentrescue of Fannie Mae and Freddie Mac - whose share prices haveplunged in recent weeks as they struggle with billions of dollarsin losses from bad mortgages - could be costly for scores ofinvestment, banking, and insurance companies, says S&PMarketScope.

Shares of the two companies were higher after Freddie Mac's successin auctioning $2 billion worth of debt Monday. Also, Reutersreports two of the biggest U.S. bond investors said they would getinvolved in a capital raising by Fannie and Freddie as long as theU.S. Treasury participates in the new deals. But Bill Gross, chiefinvestment officer at Pacific Investment Management Co., and DanFuss, vice chairman of Boston-based Loomis Sayles, disagree on whatshape any deal with Treasury should take, according to separateinterviews on Friday.

U.S. existing home sales rebounded 3.1% to a 5.0 million unitannual pace in July, offsetting the 2.8% drop to a 4.85 millionrate in July. The reading was a little bit better than the 4.9million expected. Sales are still down 13.2% over last year,decelerating from -15.5% previously. Single family sales rose 3.1%but are still down 12.4% from a year earlier. Condo and coop saleswere up 3.4%, but are down 18.6% over last year.

The months' supply of homes on the market rose to 11.2, from 11.1,on a sharp increase in condo inventory. The median sales pricedipped to $212,400 from $215,100, down 7.1% year-over-year.

"Though the slightly better than expected reading suggests thatbargain hunters are starting to enter the market, we still expectsales to remain weak for another year," wrote S&P senioreconomist Beth Ann Bovino in a note Monday.

On Tuesday, traders will examine a report on July new home sales and the minutes from the Federal Reserve's July policy meeting.

October West Texas Intermediate crude oil futures, which plunged$6.29 Friday, rose 52 cents Monday to $115.11 per barrel in one ofthe most volatile days in a while. London markets were closed for aholiday, which contributed to slow trading and wild movements.

Among other stocks in the news Monday, Grey Wolf (GW) agreed to beacquired by Precision Drilling Trust (PDS) in a $2 billion deal forthe Houston gas drilling firm. Precision, a Canadian firm, raisedits bid after Grey Wolf rejected a buyout offer two weeks ago.

Werner Enterprises (WERN) was reportedly downgraded from outperformto market perform by Wachovia analysts, who downgraded the entireU.S. trucking sector from overweight to market weight.

Healthways (HWAY) affirmed previous guidance of 2008 earnings of$1.50 to $1.55 per share. The company expects solid earnings growthin the first quarter of 2009, but a decline in revenue.

LDK Solar Co. (LDK) says its wafer plant reached a milestone of 1.0gigawatts of wafer production. The firm said it expects revenue of$2.8 billion to $3 billion as it ships 1.45 to 1.55 gigawatts ofsolar wafers.

Losses for major European stock indexes deepened in late tradingMonday. In Paris, the CAC 40 index slipped 1.01% to 4,355.87.Germany's DAX index fell 0.72% to 6,296.95. The London stock marketwas closed for a holiday.

Major Asian indexes were higher. Japan's Nikkei 225 index added1.68% to 12,878.66. In Hong Kong, the Hang Seng index rallied 3.5%to 21,104.79.

Treasury market

Treasury prices were surging Monday. The 10-year note was higher at101-26/32 for a yield of 3.786%, while the 30-year bond climbed to101-25 for a yield of 4.395%.


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