Housing Sinks Stocks, Dow at 6-Week Low

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Includes: BIG, BKS, C, DELL, DIA, HPQ, JNJ, MDT, PAR, PFE, QQQ, SPY, TSN, WMT
by: Midnight Trader

4:20 PM, Aug 24, 2010 --

  • NYSE down 103.95 (-1.5%) to 6,681.02
  • DJIA down 134 (-1.3%) to 10,040
  • S&P 500 down 15.5 (-1.5%) to 1,052
  • Nasdaq down 36 (-1.7%) to 2,124

GLOBAL SENTIMENT

  • Hang Seng down 1.1%
  • Nikkei down 1.33%
  • FTSE down 1.51%

UPSIDE MOVERS

(+) AVII reports positive study results.

(+) MGIC signs four new partners.

(+) DTPI to be sold to PriceWaterhouseCoopers for $12.50 per share.

(+) FMCN continues evening gain that followed earnings.

(+) DUK downgraded.

DOWNSIDE MOVERS

(-) CRH warns for earnings.

(-) PFE says cancer study fails to meet primary endpoint.

(-) BIG EPS beat by a penny, raises FY EPS view though still straddles Street estimate.

(-) MDT meets with earnings, guides in line to below Street view.

(-) BKS reports wider-than-expected loss.

MARKET DIRECTION

Stocks end broadly in the red after disappointing housing data. The major averages had erased the bulk of their steep losses in afternoon action but a fresh leg down late in the session pushed the indexes back into the lower half of the day's range. The DJIA had dropped below 10,000 in the immediate wake of a reported drop in home resales but ends just above that line, off 1.3%. The S&P 500 drops 1.5%, while the tech-heavy Nasdaq sheds 1.7%. Stocks began the day under water as Asia and European averages both dropped in reflection of global investor jitters over the state of the recovery.

Crude futures end 2% lower, with the October contract at $71.63, an eleven-week low. Gasoline for September delivery settled at $1.85 a gallon, the lowest price since December 2009.

Equities and commodities fell after the National Association of Realtors said sales of previously occupied homes plunged 27% in July to an annual rate of 3.83 million, the lowest rate in 15 years. That's much worse than the 4.7 million estimate from economists polled by Thomson Reuters. The 27% drop from the previous month was the biggest since record-keeping began in 1968.

In company news:

Citigroup's (NYSE:C) efforts to streamline its consumer unit in North America has caused the overdue loans to jump more than originally expected after the bank moved about 750,000 customer accounts to new locations, Bloomberg reported, citing a person briefed on the matter. That could increase the cost to make CitiFinancial--the name of the consumer finance unit--ready for sale, the report said.

Johnson & Johnson (NYSE:JNJ) fell amid a Food and Drug Administration warning that its DePuy Orthopaedics unit is illegally marketing two products. The FDA warned Johnson & Johnson's unit that one product has never been approved for sale and another product is being sold for uses that have not been specifically approved.

Pfizer Inc. (NYSE:PFE) fell after its cancer drug Sutent failed to improve the survival rates in patients who had previously been treated for lung cancer. When combined with the drug Tarceva, however, Sutent met its secondary goal of improving progression-free survival in patients.

Dell (NASDAQ:DELL) is preparing a souped up offer for 3Par inc. (NYSE:PAR) as it competes with Hewlett-Packard (NYSE:HPQ), which bid $1.6 billion earlier this week, according to a Bloomberg report, citing a person familiar with the deal. The offer could be sent in the coming days, the report said, citing the source. Earlier, Dell had agreed to pay $1.5 billion for the company.

Tyson Foods (NYSE:TSN) fell on news its subsidiary is recalling 380,000 pounds of deli meat that could be contaminated with Listeria monocytogenes. The meats were produced by Zemco Industries and were sold to Wal-Mart Stores (NYSE:WMT) and used for Marketside Grab and Go Sandwiches. The meats were produced between June 18 and July 2.

In earnings news, Medtronic (NYSE:MDT) shares are sharply lower after the medical device company lowered its profit forecast, citing slowing sales for it defibrillators and spinal products, reported Bloomberg. Medtronic reported Q1 non-GAAP EPS of $0.80, in line with the Thomson Reuters mean analyst estimate. Revenue of $3.773 billion is down 4% compared to the $3.933 billion reported a year ago. The Street expected $3.945 billion.

Barnes & Noble (NYSE:BKS) fell after its first quarter loss was bigger than expected, and the book store group cut its outlook for the year. The company posted a loss of $62.5 million, or $1.02 a share excluding legal costs, compared to a profit of $12.3 million, or 21 cents a share, a year ago. Sales rose 21% to $1.4 billion.

Also, Big Lots (NYSE:BIG) moved down 2.8% in choppy trade after missing the Street on fiscal Q2 revenue; it's getting little lift from a raised EPS forecast on the year, as economic concerns weigh on equities in today's trading. The company reported $1.148 billion in Q2 revenue, compared with Street's consensus view for $1.15 billion. The company reported earnings $63 million, or 48 cents per share, a penny better than the Street.