Major indices lost more ground Thursday, as worries about the housing slump weighed on investors' minds. The Dow Jones Industrial Average dropped 121.0 points (-0.91%), Standard & Poor's 500 index lost 19.4 points (-1.32%), and the Nasdaq fell 25.8 points (-0.98%). Volume on the NYSE was lighter than usual at 1.24 billion shares, and decliners beat advancers by a ratio of about 4:1.
The CPI was in-line with estimates, increasing 0.3% (full story). Core CPI rose 0.2%, and now is up 2.2% for the year, slightly above the Fed's unofficial comfort zone. In other economic news, the Labor Department announced initial jobless claims unexpectedly increased by 30,000, well ahead of estimates. The Philadelphia Fed manufacturing index provided a stronger reading than anticipated. The U.S. 10-year Treasury rallied up 24/32, pushing yields down to 4.16%, despite the tame inflation data.
Comments from Wells Fargo (-3.8%) CEO John Stumpf pushed stocks down late Thursday. He said the U.S. housing crisis is the worst since the Great Depression, and he sees the slump continuing passed next year. Thursday was Barclays' (-2.0%) turn to announce a large writedown; the bank said it will take a lower-than-expected $2.7 billion charge to reflect losses over the last four months (full story). GE (-1.8%) said it would allow investors in its $5 billion short-term bond fund to redeem their money for $0.96 on the dollar, because of the losses the fund has had from mortgage market problems.
The utilities (+0.7%) sector was the lone winner Thursday, while financials (-2.3%), energies (-2.4%), and materials (-2.8%) fell hard. Crude dropped $0.66 to $93.43, after U.S. inventories unexpectedly increased (full story). Tyco (-2.8%) reported earnings fell 85% from last year, mostly because of restructuring costs and a higher tax rate (full story). JC Penny (-5.1%) reported third-quarter results that matched targets, but lowered its fourth-quarter guidance (full story). PetSmart (+6.8%) beat estimates and raised its 2007 earnings view (full story).
To end the week, Industrial Production (9:15 AM) will be released Friday.
Commentary: Housing Market Tracker - Subprime Review • ETF Performance YTD: The Good, the Bad and the Ugly
Stocks to watch: WFC, BCS, GE, JCP, TYC, PETM