Tuesday Wrap - Dow -0.29%, S&P -0.03%, NQ +0.22%

by: Roy Mehta

Markets finished mixed Tuesday, with many buyers taking a pause after a horrendous housing number was released. The Dow Jones Industrial Average was down 40.24 points (-0.29%), the S&P 500 slid 0.41 points (-0.03%), and the Nasdaq Composite Index finished 6.12 points higher (+0.22%). Volume at the NYSE was 1.27 billion, with decliners edging out advancers 9:7.

The market was hit with yet another disappointing housing number Tuesday, when the National Association of Realtors announced pending home sales dropped 6.5% in August (full story). The number was the lowest reading since the index was established in 2001, and was nowhere close to economists' expectations of a 2% decline. The 10-year Treasury was up 6/32, lowering the yield to 4.52%.

M&A activity dominated the headlines, with TD Bank Financial Group's (-0.3%) plans to acquire Commerce Bancorp (+5.6%) for $8.5 billion taking the spotlight (full story). Royal Bank of Canada (+0.5%) announced its plans to buy Caribbean Bank, RBTT Financial Group, for about $2.2 billion. Citigroup (0.3%) will buy the rest of Nikko Cordial, a Japan-based broker, for $4.6 billion (full story). It had previously owned 68% of the Nikko. Finally, Sallie Mae (+0.4%) got a revised from the group of private equity firms and banks looking to buy SLM out. The deal lowered the bid by $10/share, but had performance incentives that would make up for the lower bid in the form of warrants (full story).

With all the activity in the sector, financials (+0.8%) led the pack, while energies (-1.3%) fell the most. Despite the negative housing data, housing stocks had a strong day with the Philadelphia Housing Sector Index ending up 2.9%. GM (2.8%) continued its upward momentum as the car manufacturer reported sales rose 4% last month. Crude was down near $79 during the day, but rallied to finish down $0.19 to $80.50/barrel. The dollar index had a decent day up 0.46%.

On Wednesday, look for an important ISM Non-Manufacturing number (10:00 AM) and the EIA Petroleum Status Report (10:30 AM) to be released.

Sources: Yahoo Finance, TheStreet.com
Commentary: Bill Gross: Fed Will Be Fixated On Housing For 'Next Several Years'Bill Gross On the Mortgage Mess
Stocks/ETFs to watch: SLM, CBH, TD, RY, GM, C

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