Benchmarks dropped on Monday on concerns over dismal home
sales data and apprehensions that the Federal Reserve may again
trim its stimulus plan. Concerns related to emerging markets and
fears an economic slowdown in China had dealt a severe blow to
the benchmarks last week. These concerns were also evident
yesterday and markets extended the losses.
BEAZER HOMES (BZH): Free Stock Analysis
HOVNANIAN ENTRP (HOV): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
TOLL BROTHERS (TOL): Free Stock Analysis
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) dropped 0.3% to close at
15,837.88. The Standard & Poor 500 (S&P 500) was down
0.5% to 1,781.56. The tech-laden Nasdaq Composite Index tanked,
the most as it dropped 1.1% to end at 4,083.61. The fear-gauge
CBOE Volatility Index (VIX) dropped about 4% to settle at 17.42.
Total volume on the New York Stock Exchange was 4.05 billion. The
advancers were far outnumbered by the decliners on the NYSE, as
for 26% stocks that gained, 72% stocks moved lower.
A move below the technical level of 1,800 for the S&P 500 may
have accelerated selling. The next support level for the S&P
500 is pegged at 1,775. Apart from technical signals, the selloff
was also triggered somewhat by the drop in sales of new
The U.S. Census Bureau and the Department of Housing and Urban
Development jointly reported a 7% month-on-month decline in new
single-family houses sales in December. Sales fell to 414,000,
which was sharply lower than the consensus estimate of a
seasonally adjusted annual rate of 414,000.
The SPDR S&P Homebuilders ETF (XHB) was down 0.5% yesterday
and housing stocks like PulteGroup, Inc (NYSE:
), Lennar Corp. (NYSE:
), KB Home (NYSE:
), Hovnanian Enterprises Inc. (NYSE:
), Toll Brothers Inc. (NYSE:
) and Beazer Homes USA Inc. (NYSE:
) dropped 0.7%, 0.3%, 2.7%, 1.7%, 1.6% and 1.1%, respectively.
Markets were also dragged lower by apprehensions that the central
bank will further trim its stimulus plan. The central bank had
announced its decision following the conclusion of the Federal
Open Market Committee meeting on Dec 18 to start tapering its $85
billion bond buyback plan. It was decided to reduce bond
repurchases by $10 billion, bringing monetary stimulus to $75
billion a month from January.
Monday's decline is a continuation of the bearish mood last week.
The Dow was down 3.5% last week, registering its worst weekly
loss since 2011. The Standard & Poor 500's 2.6% weekly loss
led to its worst weekly percentage decline since June 2012. The
Nasdaq dropped 1.7% in the week.
Last week, reports of a contraction in China's manufacturing
activity had unnerved investors. At the same time, political and
economic concerns emanating from emerging markets dragged
currencies to multi-months low. In fact, emerging-market
currencies suffered their worst selloff in five years.
Argentina's government said it would curtail its support to the
foreign-exchange market, dragging the peso lower.
The peso had its worst fall since 2002. A threat to the stability
of the government in Turkey has seen its currency hitting record
lows of late. Separately, hryvnia, Ukraine's currency, dropped to
a four-year low. South Africa's rand saw itself weakening beyond
11 per dollar for the first time since 2008.