18 November, 2009
US STOCKS-Tech outlook, home construction weigh on Wall St
* Decline in Oct housing starts fuels caution
* Tech hit after worrying outlooks
* Indexes off: Dow 0.5 pct; S&P 500 0.4; Nasdaq 0.9
* For up-to-the-minute market news, click [STXNEWS/US] (Updates to late afternoon, changes byline)
By Edward Krudy
NEW YORK, Nov 18 (Reuters) - U.S. stocks fell on Wednesday, threatening to end three days of gains, following worrying outlooks from two major software makers and a surprise drop in home construction last month.
Business software maker Autodesk Inc (ADSK.O) was cautious about the outlook for the current quarter, while sector peer Salesforce.com Inc (CRM.N) reported a slowdown in new business. The news was a setback to investors looking for signs of a pickup in demand.
The government said housing starts declined to their lowest level in six months, weighed down by a sharp fall in construction activity for both single-family and multi-family dwellings, an indication the economic recovery remains uneven. For details, see [ID:nN1899353]
The major indexes have climbed to 13-month highs in recent days. The S&P 500 has ended down only three times in the last two weeks, and many investors say equities remain in a strong uptrend despite Wednesday's intraday fall.
"We are of the continued belief that right now the tailwinds propelling the market are still outweighing the headwinds," said Henry Smith, chief investment officer at Haverford Trust Co in Philadelphia.
Smith said low interest rates, government stimulus spending and signs of economic recovery were helping equities.
The Dow Jones industrial average .DJI dropped 48.14 points, or 0.46 percent, to 10,389.28. The Standard & Poor's 500 Index .SPX fell 4.71 points, or 0.42 percent, to 1,105.61. The Nasdaq Composite Index .IXIC lost 19.91 points, or 0.90 percent, to 2,183.87.
Autodesk shares slid 11.1 percent to $24 and weighed on the technology heavy Nasdaq, a day after the company, which licenses its architectural and engineering software to companies on a per-user basis, warned its recovery could be hindered by more job losses. Meanwhile, Salesforce fell 3.4 percent to $63.38. For details, see [ID:nN1747284] and [ID:nN1739572]
"Technology has been a strong area of the market, and those two results broke the momentum," said Nick Kalivas, vice president of financial research & senior equity index analyst at MF Global in Chicago.
The Dow Jones U.S. Home Construction index .DJUSHB climbed 0.4 percent, bolstered by a Citigroup upgrade of Pulte Homes Inc (PHM.N) to "buy" from "hold." Pulte rose 4 percent to $9.98.
While the decline in new construction raised concerns about the recovery, it could bode well for removing remaining inventory from the market, something analysts say must happen for the housing sector to recover.
Losses were kept in check by advances in the financial sector. The S&P financial index .GSPF added 0.5 percent.
Craig Peckham, equity trading strategist at Jefferies & Co in New York, said a prediction by hedge fund billionaire John Paulson that Bank of America Corp (BAC.N) stock could double in two years helped drive up the shares 2.6 percent to $16.18.
"One of the most successful investors during the credit crisis is now extending long bets on big banks like Bank of America," Peckham said. Paulson made his comments in an investor note that was reported by Bloomberg News.
Analysts said the inverse correlation between the dollar and equities -- which has helped to boost natural resource stocks by lifting the price of dollar-denominated commodities -- appeared to break down.
Many mining and most energy shares were lower, even as the dollar fell. Freeport McMoRan Copper & Gold Inc (FCX.N) was off 1.6 percent to $84.04, while Chevron Corp (CVX.N) dropped 0.3 percent to $78.60.
Oil fell 0.6 percent, while the dollar fell 0.3 percent to a basket of currencies .DXY. (Reporting by Edward Krudy; editing by Jeffrey Benkoe)
Source: http://www.reuters.com
US STOCKS-Tech outlook, home construction weigh on Wall St Added: (18.11.2009)
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