The housing market is showing some signs of life -- thanks to foreclosure sales. But stocks were tumbling because of rising interest rates and oil prices.

 

Crude oil briefly topped $63 a barrel, and the yield on the 10-year Treasury note hit 3.695%, up from 3.493% on Tuesday. The yield is up nearly 20% this month alone.

 

At 3:30 p.m. ET, the Dow Jones industrials ($INDU) were down 157 points, or 1.9%, to 8,317. The Standard & Poor's 500 Index ($INX) was off 15 points, or 1.7%, to 895. The Nasdaq Composite Index ($COMPX) was off 17 points, 1%, to 1,734.

 

For those hoping for a continuation of Tuesday's rally, today has to be a disappointment. And the home sales report disappointed anyone looking for a turnaround, since it suggested a housing recovery is going to be slow at best.

 

Meanwhile, the uncertainty created by a probable bankruptcy filing by General Motors (GM, news, msgs), perhaps next week, is casting a pall on the market.

 

GM announced this morning that bond holders rejected the terms of an offer to convert $27 billion in debt into GM common stock, preferring to take their chances in bankruptcy court.

 

North Korea test-fired two short-range missiles today, a day after the country was condemned around the globe for conducting its first nuclear test in three years.

 

The U.N. is reportedly going working toward issuing new sanctions against North Korea as a result of the tests.

Japan's Nikkei 225 Index ($JP:N225) dropped 0.4%, the MSCI Asia Pacific Index was down 0.2%, and Hong Kong's Hang Seng Index ($HSIX) lost 0.8%. South Korea's Kospi Index lost 2.1%.

 

President Barack Obama this morning nominated federal appellate Judge Sonia Sotomayor to replace Justice David Souter on the U.S. Supreme Court.

 

If confirmed, Sotomayor would be the first Hispanic justice on the court. She would also be the third female justice.

 

Crude oil turned higher this afternoon, rising 4 cents to $61.71 a barrel this afternoon, ahead of Thursday's meeting of the Organization of Petroleum Exporting Countries in Vienna, Austria.

 

Saudi Arabian Oil Minister Ali al-Naimi said OPEC would "probably stay the course" regarding oil production; al-Naimi expects demand to pick up, pushing prices up to $75 a barrel.

 

That target may be overshooting, one expert said.

"We've got plenty of supplies, and there's nothing to suggest the economy is improving," Peter Beutel, the president of energy consulting company Cameron Hanover, told Bloomberg News. "OPEC doesn't look like it will lend much support. The market is trying to figure out where it's going next."

 

Those elusive "green shoots" seem to be back.

 

Stocks were soaring after the Conference Board's report on consumer confidence showed a reading of 54.9 in May, a surge from the upwardly revised reading of 40.8 in April. Economists had been looking for a reading of 43.

 

"Expectations are that business conditions, the labor market and incomes will improve in the coming months," said Lynn Franco, director of the Conference Board's Consumer Research Center. "While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us."

 

That optimism sparked a broad rally today. At 1:15 p.m. ET, the Dow Jones Industrial Average ($INDU) was up 200 points, or 2.4%, to 8,477. The Nasdaq Composite Index ($COMPX) had surged 54 points, or 3.2%, to 1,746, and the Standard & Poor's 500 Index ($INX) had gained 22 points, or 2.5%, to 909.

 

Shares of Sears Holdings (SHLD, news, msgs) rose $5.21, or 10.4%, to end the session at $55.40 after the company posted a surprise profit for the first quarter.

 

A group of private equity companies has taken over BankUnited Financial (BKUNA, news, msgs) after the regional bank was briefly taken over by federal regulators late Thursday. The Office of Thrift Supervision called the bank "critically undercapitalized."

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The new owners include WL Ross & Co., Blackstone Capital Management, Carlyle Investment Management and others. BankUnited, whose failure is the 34th for a bank this year, has $12.8 billion in assets, $8.6 billion in deposits and 86 branches. Last year, 25 banks failed.

 

American International Group (AIG, news, msgs) late Thursday said Chief Executive Officer and Chairman Edward Liddy will step away from the helm of the troubled company once a replacement is found.