Stocks end little changed as worries about economy, housing remain
NEW YORK -- SInvestors have taken scant comfort from the government's plans to revive the economy and the housing market.
Investors have taken scant comfort from the government's plans to revive the economy and the housing market.
Stocks are ending essentially flat Wednesday after a steep sell-off a day earlier on worries about the global economy. Several modest rallies unraveled during the day as market indicators hovered around the lows they marked in November.
President Barack Obama released details Wednesday of his $75 billion mortgage relief plan and investors remained uncertain about the prospects for the economy.
The plan is designed to help stabilize the housing market and reduce foreclosures. Sharp drops in housing prices and sales and rising foreclosures have caused the toughest recession in decades
Obama's announcement of the plan comes a day after he signed into law a $787 billion economic stimulus plan he hopes will help revive the economy.
The Dow Jones industrial average rose 3.03, or 0.04%, to 7,555.63. The blue chips are ending just above their November low.
The Standard & Poor's 500 index fell 0.75, or 0.10%, to 788.42. The Nasdaq composite index fell 2.69, or 0.18%, to 1,467.97.
The Russell 2000 index of smaller companies fell 5.72, or 1.3%, to 423.18.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange. Consolidated trading volume came to a light 5.65 billion shares compared with 5.78 billion shares traded Tuesday.
The housing plan follows a much worse-than-expected reading on the housing market, as the Commerce Department said construction of homes and apartments dropped by 16.8% in January to a record low annual rate. Applications for building permits also dropped to a record low, falling 4.8%.
And big industry production fell in January due partly to auto shutdowns. Production at the nation's factories, mines and utilities fell 1.8% last month. Many economists expected a 1.5% decline. It marked the third straight month where production was cut back and December's performance was even weaker than initially reported, plunging 2.4%.
David Hefty, chief executive of Cornerstone Wealth Management in Auburn, Ind., said investors are questioning the viability of the government's plans to bolster the banking sector and pull the country out of recession. "There's a huge lack of confidence in that stimulus package," Hefty said.
On Tuesday, the Dow closed just above its November low as doubts about the stimulus bill and plans to revive the banking sector continued to weigh on investors. Worries about Eastern European banks weighed on world markets. The Dow tumbled 298 points, or 3.79%, to 7,552.60 — just 31-hundredths of a point above its post-meltdown Nov. 20 close of 7,552.29, which was its lowest finish since March 12, 2003. The Standard & Poor's 500 index fell 37.67, or 4.56%, to 789.17.
But the Dow and S&P remain above their Nov. 21 trading lows. The levels are an important psychological barrier for traders. A breach of the trading lows could send investors running. For the Dow, 7,559.38 is the November trading low; for the S&P it's 741.02.
Bond prices fell after jumping amid the slide in stocks Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.75% from 2.65% late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.30% from 0.29% late Tuesday.
The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude fell 31 cents to settle at $34.62 per barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 fell 0.7%, Germany's DAX index lost 0.3%, and France's CAC-40 slipped less than 0.1%. Japan's Nikkei stock average fell 1.5%.