Russell drops on economic data
The Russell 2000 (NYSE: IWM) is down and the Dow (INDU) is flat following news of disappointing economic data.
At 10:52 a.m. ET, the small-cap index had shed 4.65 points, or 0.58%, to 801.15. The Dow Jones Industrial Average was up 9.59 points, or 0.07%, to 13,768.65.
The slump in the U.S. housing sector rages on and the American consumer is losing his willingness to spend, according to statistics released this morning.
Total existing-home sales fell a more-than-expected 4.3% to a seasonally adjusted annual rate of 5.50 million units in August, the National Association of Realtors reported after the start of trading. Economists were projecting a more modest decline to a pace of 5.55 million from a level of 5.75 million in July.
“The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales,” said NAR senior economist Lawrence Yun in a press release.
The inventory of unsold homes also increased.
Lennar Corp. (NYSE: LEN), the second largest U.S. homebuilder, illustrates the dire state of the housing sector.
The Miami-based company swung to a third-quarter net loss of $513.9 million, or $3.25 a share, compared with a profit of $206.7 million, or $1.30 a share, a year earlier.
In other economic news, consumer confidence in September fell more than forecast. The Conference Board reported that its index tumbled to a reading of 99.8, from an upwardly revised level of 105.6 in August. Weaker business conditions and a less favorable job market helped lower the index to its lowest reading in almost two years as American’s view of current-day conditions worsened.
A decline in consumer spending will lead to a slowdown in economic growth, as consumption accounts for about 70% of gross domestic product.
