U.S. stocks and exchange traded funds (ETFs) are oscillating between positive and negative territory on a surprise drop in housing data that seems to send a signal that dashes hopes of a bottom.
Builders broke ground on the fewest homes on record in April as a plunge in work on condominiums and apartment buildings overwhelmed the second straight gain on starts on single-family properties, states Bob Willis of Bloomberg. The Commerce Department reported that housing starts slid a lower-than-expected 13%, giving hope that a housing recovery may be in sight.
As a result of the current housing slump, the largest home improvement dealer, Home Depot (HD), reported a 9.7% decline in first-quarter sales. Regardless, the company was still able to beat Wall Street’s expectations reporting earnings of $0.35/share as compared to analysts’ forecasts of $0.29/share. The SPDR S&P Homebuilders (XHB) dropped about 0.3% in intraday trading, despite being up 7.3% for the year.
The auto industry is making headlines once again. President Barack Obama plans to announce the first-ever national emissions limits for vehicles, which will require an overall fuel efficiency standard in the industry of 35.5 miles/gallon. The proposed change will combine pollution reduction with increased efficiency on the road, states Ken Thomas and Philip Elliot of the Associated Press. Additionally, the change will save billions of barrels of oil, but will cost consumers nearly an extra $1,300 per vehicle.
Things are still not looking too good for financial institutions. One of the nation’s leading credit card issuers, American Express (AXP), announced that it will be slashing nearly 4,000 jobs in an attempt to cut an additional $800 million in costs for the remainder of 2009. The layoffs represent 6% of the company’s global work force and is in addition to the 7,000 employees laid off in October. Despite this news, the Financial Select SPDR (XLF) gained nearly 1% in morning trading; AXP is 3.2%.
On the positive side, the Libor, which is the cost of borrowing in dollars between banks, had its biggest two-day drop in more than four months, indicating that credit is starting to unfreeze, the global economy is starting to revert back to normalcy and lending tensions between banks is starting to dissipate.
The Dow Jones Industrial Avereage remained relatively flat, dropping nearly 0.01%, the S&P 500 was down about 0.1% and the Nasdaq added 0.1% in morning trading.
Kevin Grewal contributed to this article.