U.S.stocks and exchange traded funds (ETFs) took a dip into negative territory this morning as investors tried to assess the overall health of the economy on a not-so-upbeat housing report.
A day after the Federal Reserve announced that economic activity is improving, the National Association of Realtors said that existing home sales fell 2.7% in August, compared to a gain of 7.2% in July, snapping a four-month rally. The number of home sales fell to an annual rate of 5.10 million units as compared to expectations of 5.35 million units. The news sent the iShares Dow Jones U.S. Real Estate (NYSEArca: IYR) down 3.5% in morning trading.
The Labor Department reported that the number of newly laid-off workers seeking unemployment benefits fell for a third week. Initial claims for unemployment insurance fell by 21,000 to 530,000, much lower than the 550,000 expected by economists and an indicator that the economy is stabilizing.
Scott Lanman of Bloomberg states that the Federal Reserve plans to reduce its emergency programs that auction loans to commercial banks and Treasury securities to bond dealers as the financial markets continue to improve. Additionally, Fed policymakers committed to complete their $1.25 trillion in purchases of mortgage securities and extended the end-date of the program to March from December.