Stocks fell Wednesday after a drop in sales of new homes gave investors another reason to be cautious.
Stocks fell Wednesday after a drop in sales of new homes gave investors another reason to be cautious.
The Commerce Department said new home sales fell 3.6 percent in September to 402,000 from 417,000 in August and well below the 440,000 analysts had forecast. It was the first drop since March.
An earlier report showed orders for big-ticket manufactured goods rose in line with expectations last month.
Roy Williams, CEO of Prestige Wealth Management Group, said it is normal to have a bit of a pullback after such a strong run, as investors take some profit and rebalance their portfolios.
A disappointing earnings or economic report can give investors a reason to cash in some gains, but overall most signs point toward additional strengthening of the economy and market, Williams said.
In midmorning trading, the Dow Jones industrial average fell 18.21, or 0.2 percent, to 9,863.96. The Standard & Poor's 500 index fell 6.59, or 0.6 percent, to 1,056.82, while the Nasdaq composite index fell 18.26, or 0.9 percent, to 2,097.83.
In another sign of lingering troubles in the financial industry, GMAC Financial Services is in talks with the Treasury Department for a third bailout. The auto and mortgage lender has been among the hardest hit financial firms by rising loan defaults and troubled credit markets. The government already holds a 35 percent stake in GMAC after giving it $12.5 billion in bailout money.
Stocks struggled Tuesday after a disappointing report on consumer confidence stirred worries about the strength of the coming holiday shopping period. Corporate profits have been improving but investors are still waiting for a rebound in sales.
The Dow was able to edge out a small gain because of strength at IBM Corp. and rising energy stocks. However, the S&P and Nasdaq both fell Tuesday.
Stocks have been falling most days since hitting their highest levels in a year at the start of last week. A strengthening dollar and falling commodities prices have at times weighed on stocks.
On Wednesday, the dollar rose against most other major currencies, while gold prices also rose.
Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.45 percent.
The Russell 2000 index of smaller companies fell 6.42, or 1.1 percent, to 580.57.
