Stocks slip after housing data, ahead of Fed minutes

July home sales show market strength. Investors hope central bank policymakers will hint at more stimulus. Japan's trade deficit heightens worries about a global slowdown. Dell warns of a tough second half.

By Melly Alazraki Aug 22, 2012 9:18AM
Updated at 12:14 p.m. ET

Stocks remained lower Wednesday as global slowdown concerns once again took center stage after Japan reported weak economic data. As investors awaited the minutes from the Federal Reserve's most recent policy meeting, housing data continued to show improvement. Shares of Dell (DELL) were sliding after the company on Tuesday warned of a challenging second half.

The Dow Jones Industrial Average ($INDU) was down 59 points at 13,144. The S&P 500 ($INX) was down 4 points at 1,409. The Nasdaq Composite ($COMPX) was down 3 points at 3,064.

Asian markets ended lower after Japanese data showed the country's trade deficit widened more than expected in July as exports plunged.

European shares followed suit, and U.S. markets seemed on their way to join the global decline. As one of the largest exporters in the world, Japan reported numbers that could imply weaker global demand. Japan's trade data showed shipments to China and Europe plunged 12% and 25%, respectively, in July from a year earlier.
European debt crisis
In Europe, equities were under further pressure ahead of several meetings between Greek Prime Minister Antonis Samaras and several European leaders. Greece will ask for some breathing room, making the case to extend the implementation of the country's austerity program by two years. If Greece doesn't get the support it needs to deal with its debt crisis it may have to leave the euro, destabilizing other eurozone countries and the currency.

In recent days, Europe has mostly gathered strength on hopes that the European Central Bank plans to implement a bond-buying plan in September to help the region out of its debt crisis. The plan, however, has been hyped, criticized and downplayed, leading markets along higher or lower.

Fed minutes
But even as investors try to fully comprehend the meaning of the goings on in Europe and globally, they'll be waiting for the Fed's minutes.

At 2 p.m. ET, the Fed will release its notes from the latest Federal Open Market Committee meeting on July 31-Aug. 1.

Investors will pore over the minutes to get a better picture of the state of the U.S. economy and perhaps find hints as to the Fed's plan about the possibility of a third stimulus program, QE3. Many hope such a program will be unveiled at the Jackson Hole, Wyo., symposium on Aug. 31. Many doubt, however, the minutes will provide any clear signal to the Fed's intentions, especially given recent better-than-expected U.S. economic data.

Housing resales jump
Sales of existing homes rose 2.3% in July from the previous month to a seasonally adjusted annual rate of 4.47 million, the National Association of Realtors reported Wednesday. Economists expected a pace of 4.5 million. Sales rose 10.4% from the same month a year earlier. The median price of existing homes climbed 9.4% year on year to $187,300, and inventories rose 1.3% to 2.4 million units, representing 6.4 months of supply.

Also, weekly mortgage applications declined a sharp 7.4%, the Mortgage Bankers Association said. Applications for refinancing tumbled 9% as interest rates edged higher.

CBO warns of recession risk
The nonpartisan Congressional Budget Office warned of a recession risk because of the "fiscal cliff." The CBO predicts that the U.S. economy will grow at a 2.1% pace in 2012. But if Congress fails to act to maintain current tax rates and avert deep cuts to federal spending, the U.S. would experience a recession, with unemployment rate jumping to about 9% in the second half of 2013 from its current 8.3%.

The CBO estimates the U.S. government will run a budget deficit of $1.1 trillion in fiscal 2012, or 7.3% of gross domestic product, slightly lower than the agency's March estimate.

Stocks to watch
Dell (DELL) shares slipped after the No. 2 U.S. PC maker beat analyst earnings estimates but warned of a challenging second half, slashing its full-year outlook. Customers, it said, cut back on computer purchases ahead of the launch of Microsoft's (MSFT) Windows 8 software. In general, though, Dell is struggling to compete with cheap Asian rivals and the adoption of tablets. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

Hewlett Packard (HPQ), which is also due to report results after the close, saw its shares decline after Dell's results.

Luxury home builder Toll Bros. (TOL) earned 36 cents per share for its fiscal third quarter, double analyst estimates. Revenues also came in above consensus. "Housing is on the mend," executive chairman Robert Toll said. CEO Douglas Yearley added, "We believe the housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes." Yearley, however, explained that because the company is focused on the luxury market, it is facing less competition from other builders. 

American Eagle Outfitters (AEO) shares rose after the retailer said it will meet or beat Wall Street's earnings target for the third quarter.

Williams-Sonoma (WSM) shares soared after the company reported results that beat Wall Street expectations. Meanwhile Express (EXPR) shares slipped after the retailer reported a 26% rise in profit, but cut its full-year earnings projection.

BHP Billiton (BHP) is postponing or scaling back projects together worth more than $50 billion, a reversal from a previously aggressive expansion strategy and a sign that the mining boom has ended, The Wall Street Journal reported. BHP Billton said annual net profit fell 35%.

Fifth Third Bancorp (FITB) approved a stock-buyback authorization for up to 100 million shares. In addition, Fifth Third's directors are likely to consider a dividend increase next month.

Apple (AAPL) and Samsung lawyers made their closing arguments Tuesday. Now it's up to the jurors, who have to answer 600 questions before they make a decision.
Aug 22, 2012 10:27AM
The more I reflect on our economy the more it becomes evident that we will never get the Jeannie back in the bottle. We will never pay down our 16+ Trillion Dollar debt. Soon, 50% of what we collect in taxes will just go toward interest payments. Defaulting seems inevitable... The question is when. I don't see how we can recover from this mess. It is very sad. 25 years ago, we were the largest creditor nation, and we used to forgive other countries debt to us left and right, now, we are the largest debtor nation courtesy of failed liberal dnc/rnc policies... Sadly, this is/was exactly the intent of Socialist. They flooded the system with an entitlement and welfare mentality in order to bring down the very system that built our wealth, freedom and independence. Am I being a little too melodramatic?
Aug 22, 2012 10:24AM

Obama is not a strong leader.  He is exceptionally weak.  He had zero foreign policy experience.  Hillary is propping him up.   Turns out now, that Valarie Jarrett stopped the first 3 raids to kill Osama, and only fear of it leaking out allowed a 4 try to proceed.

Obama is just as clueless in foreign affairs as economic affairs.  The rest of the world laughs at him, or like the Poles, cannot believe how uneducated he is.  We elected a clown.
Aug 22, 2012 10:22AM
Mr. Prez:

What is your position on the deficit ?  ANSW:  We need additional Romney tax returns.

What are you going to be doing about friendly fire in Afghanistan?  ANSW:  We need additional Romney tax returns.

What are you going to do about making Medicare and Social Security sound  ?  ANSW:  We need additional Romney tax returns.


Obama needs to get his "big stick" (just ask Biden) out of America's anus.
Aug 22, 2012 10:26AM
The real inflation rate is above 8% The real unemployment rate is above 16%. MSNBC will not report this, they want to get Obama reelected.
Aug 22, 2012 9:51AM
Bernanke has caused enough irreparable damage to our economy, so will the damage continue??  His incompetence, along with the policies of this administration, will turn the USA into a banana republic. 
Aug 22, 2012 10:14AM

After all of the wall street crap, now they want Bernanke to give them more and they have and are making a mint off of the suckers in the markets. I say write to your congressmen and women and senators and stop Bernanke from giving wall street a dime!!!!!!!!!!! I am!!!

It s all a bunch of made up crap that wall street wants to make everyone pay out the wazoo for gas and oil and food and then wants the taxpayers to pay them more for doing it.

Make Bernanke pay it all back out of his pocket and he won't be so free with the taxpayers money!!!!!!!!!

Aug 22, 2012 9:40AM

Just another day on WS with a hole lot of BS .....


Go MITT Go !!!!


Pretty much the 2013 total meltdown is starting to happen.


Bernanke and the Federal Reserve are now powerless to stop the total collapse of the western banking system.


Their efforts have now made the situation so bad that the collapse instead of being a slow and smooth float to the bottom a fast and roller coaster ride to the bottom.


Be prepared for your house to be worthless and all the monies drained from your retirement accounts.


The light at the end of the tunnel is about ready to hit us full steam.

Aug 22, 2012 9:46AM
Aug 22, 2012 10:16AM
Such a strong leader...???:

"Russia rebuffed President Barack Obama's threat of unilateral action against Syria Tuesday, as officials said 2,500 refugees fled across the border into Turkey in just 24 hours – one of the highest daily refugee flows of recent weeks.

Russian Foreign Minister Sergei Lavrov, speaking after meeting China's top diplomat, said Moscow and Beijing were committed to "the need to strictly adhere to the norms of international law ... and not to allow their violation"."

Aug 22, 2012 11:45AM
Get rid of Obama, and business may prosper.
Aug 22, 2012 11:46AM
More arrogant, clueless actions by our hopefully soon to be one term President.....

The Democratic National Committee has informed a Connecticut town it will not be reimbursed for the thousands of dollars the city spent on costs for President Obama's fundraising visit earlier this month.

Gordon Joseloff, the first selectman of Westport, says he was informed this week the town's request to have the DNC and Obama for America cover the $14,812 the city paid in police and fire overtime was denied.

The president traveled to the area on Aug. 6 to attend a fundraiser in Stamford and a $35,800 per person dinner at the Westport home of movie producer Harvey Weinstein.

Aug 22, 2012 11:40AM

Craigsolm - I have to agree, I am against corn ethanol, net energy loser, requires a ton of water to make very little ethanol.  Water shortages will only increase as our poplulation rises.  Sorry farmers but you guys are so wrong on this one.

Aug 22, 2012 11:39AM
Do Democrats believe that when America is in economic stress it should be raped with additional taxes?
Aug 22, 2012 11:25AM

What Akin said was stupid -- however, if being stupid was a disqualifier for serving in the government, a whole lot of people need to go! All things being equal, I would take Akin over Harry Reid, Nancy Pelosi, Joe Biden, and all the other DNC idiots every day of the week.

Aug 22, 2012 11:36AM
Just do it!

"The EPA announced Monday that it will begin weighing requests for a suspension of the mandate, which requires that gasoline contain 10 percent ethanol."
Aug 22, 2012 12:18PM
I am pro-life. I have a friend from Asia. I talked to her once about China, and the policy of having one child. I laughed and said, what are they going to do to you if you have another kid. What she told me was the government won't give the child a birth certificate which means the child doesn't exist. The child can't go to school, or get a job, or any license. He does not exist according to the goverment. Makes you love america where we can talk about issues that are so important.
Aug 22, 2012 10:56AM
Remo, to answer your question, you need to look no further than "the National Association of Realtors reported Wednesday...."

Consider the source.
Aug 22, 2012 10:43AM
Beware of Greeks bearing gifts................. Wall Street is offering free permcaths for anyone wanting to funnel what's left of their money into the market - they also promise to return all your money plus a high return rate just as soon as the Fed reimburses them again....  The market will be down today because a Japanese snow monkey farted in the hot springs and the bubbles went sideways instead of to the surface.    
Aug 22, 2012 12:28PM
The looney left -

They love to deny a mother the right to buy a gun for self defense but if she wants to kill her baby, well then that is a beautiful thing. 
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