By Kate Gibson
A trade group's report of another monthly decline in existing home sales on Wednesday helped propel Wall Street lower, but the data also offer evidence of market forces in play that could speed up the nation's eventual economic recovery.
Financials once again dictated direction, with the Dow Jones Industrial Average (DJI) lately falling 173.64 points to 7.177.3. The S&P 500 Index (SPX) declined 18.1 points to 755.04, and the Nasdaq Composite (RIXF) shed 31.91 points to 1,409.92.
Equities extended their losses after the National Association of Realtors reported existing home sales in January fell 5.3%, a faster pace than forecast, while prices fell to near six-year lows. .
The one potentially encouraging trend in the otherwise dismal report, analysts said, is another monthly drop in supply from year-ago levels.
"We'll have to see if that trend continues. Inventory is already down sharply in the new home market, and if the existing home market can follow suit, it will eventually help stabilize housing," said Mike Larson, an analyst at Weiss Research Inc.
When sales stabilize there will be fewer available homes to purchase, quickening the pace of an economic turnaround, Larson and other analysts said.
"The supply demand fundamentals are working themselves out," said Dan Greenhaus, an analyst with the equity strategy group at Miller Tabak & Co.
What remains to be seen is how quickly that scenario plays out.
"Unfortunately, we're still oversupplied to the tune of more than a million homes -- proof positive the healing process will take time," Larson said.
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Publié le 25 Février 2009 Copyright © 2009 Dowjones