A major sell-off
Stocks are posting steep declines as investors react to news of more anguish in the housing sector and concerns of slowing economic growth. At 1:43 p.m. the Russell 2000 (NYSE: IWM) had lost 24.95 points, or 3.07%, to 787.55. The Dow Jones Industrial Average (INDU) was down 296.05 points, or 2.15%, to 13,489.02.
The bears are roaring on fears that U.S. economic growth might slow as the housing sector continues to suffer.
Orders for manufactured durable goods excluding the transportation sector fell 0.7%, the U.S. Census Bureau announced before the opening bell.
Economists, who typically factor out aircraft and automobiles to uncover the underlying trends in orders of durable goods, were expecting a rise of 0.6%.
The backpedaling is a sign that business investment is slowing, a negative development that could chip away at economic growth. Investment is about 20% of the U.S. economy.
Including the transportation sector, orders for durable goods in June increased 1.4%, or $3 billion, to a seasonally adjusted $217.07 billion, but that’s below the projected increase of 1.7%.
Already looking strong, the bears received an injection of steroids following news of more problems in the U.S. housing sector.
Sales of new one-family houses in June fell 6.6% to a seasonally adjusted annual rate of 834,000, according to the Census Bureau. On a year-over-year basis, new home sales are down 22.3%.
Take Beazer Homes USA, Inc. (NYSE: BZH) as an example of the sector’s troubles.
The Atlanta-based builder announced a larger-than-expected quarterly net loss, an increase in foreclosures, and higher inventories of unsold homes. The company is lowering prices in order to entice buyers.
With all that going on, its no wonder frightened investors are seeking the relative safety of U.S. Treasuries. The yield on the 10-year note has declined to 4.794%, the lowest level since May 21, when the yield ended the day at 4.784%.
