Wall Street stays afloat after data on new-home sales

NEW YORK (AP) – June 26, 2007 – Wall Street rose modestly Tuesday after a slight decline in May new-home sales provided investors with some relief but little reason to rally.

The Commerce Department reported that sales of new homes fell 1.6 percent in May to a seasonally adjusted annual rate of 915,000. It was the fourth decline in the past five months –in April, new-home sales had jumped by 12.5 percent – but a milder decrease than many investors anticipated.

Investors were a bit unnerved by a larger-than-expected drop in the Conference Board’s index on consumer confidence, and still jittery about ongoing subprime lending troubles.

The stock and bond markets are also trading erratically ahead of Thursday’s Federal Reserve rate decision. Central bankers are widely expected to keep the benchmark rate steady at 5.25 percent, but Wall Street will be watching to see if they alter their stance on inflation, which could suggest a rate cut or rate hike later in the year.

In mid-morning trading, the Dow Jones industrial average rose 17.72, or 0.13 percent, to 13,369.77.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 1.10, or 0.07 percent, to 1,498.84, and the Nasdaq composite index gained 1.52, or 0.06 percent, to 2,578.60.

Bonds were little changed after the new-home sales data, with the yield on the benchmark 10-year Treasury note at 5.08 percent, the same as late Monday.

Earlier Tuesday, the Standard & Poor’s home price index for April showed which declined for the 17th consecutive month, and showed its steepest annual decline since 1991.

Investors got yet another update on the status of the housing industry after homebuilder Lennar Corp. posted a loss for the second quarter as the housing downturn continues, and warned that a third-quarter loss is likely. Lennar fell 65 cents to $38.10, and other homebuilders followed.

Lennar Chief Executive Stuart Miller warned that “the housing market has continued to deteriorate throughout the second quarter. The supply of new and existing homes has continued to increase resulting in declining home prices across our markets.”

The Russell 2000 index of smaller companies was up 0.21, or 0.03 percent, at 827.67.
Overseas, Japan’s Nikkei stock average fell 0.12 percent. In afternoon trading, Britain’s FTSE 100 was down 0.18 percent, Germany’s DAX index was down 0.80 percent, and France’s CAC-40 was down 0.73 percent.

Copyright © 2007 The Associated Press, Madlen Read (AP Business Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.