Stocks suffer losses Tuesday on lack of news and on low volume. The Dow ($INDU) fell 46.51 points, closing at 10,539.72. The S&P 500 ($SPX) gave up 4.22 points to 1,218.59. The Nasdaq ($COMPQ) declined 6.17 points to close at 2,172.07. Volume was light with the NYSE trading 1.41 billion shares and the Naz turning over 1.62 billion shares. Market breadth was negative by a 12-to-20 and 12-to-18 margin on the Big Board and Naz respectively.
The big news Tuesday came from Toll Brothers (TOL) when the house builder lowered its 2006 estimate for home deliveries. Part of the reason for the company expects a shortfall is a drop in demand as mortgage rates have increased. This news took TOL shares down 13.96 percent to $33.91. The entire home building sector was hurt however, with the Philly Housing Sector Index ($HGX) off 5.38 percent. Home Depot (HD) struggled as well with traders expecting sales at this home building supplies store to decline.
Strength in the housing market has kept consumer spending strong. This is because equity has provided an easy way for home owners to get cash. Even high energy prices and a sub par employment situation have not created problems for consumer sales, so far. What economists would like to see is a slow decline in home sales while energy prices fall and the jobs market improves.
The weekly ICSC-UBS Store Sales report showed that same-store sales rose 1.0 percent for the week ending Nov. 5. This was the largest weekly gain since April, although the year over year growth rate fell to 4.1 percent from 4.4 percent. The report stated that falling energy prices helped sales during the week.
Energy prices have been on the decline of late, though crude prices rose 24-cents on Tuesday to $59.71 a barrel. Natural gas and heating oil prices were virtually flat, as were prices for unleaded gasoline. There still remain concerns about prices for heating oil and natural gas during the winter months, so anytime the outlook is for warm weather, it helps prices of these commodities.
This week is a quiet one for earnings and economic news, though Dell (DELL) will report on Thursday. Economic news will be heaviest the next two sessions and traders will be looking at the petroleum inventory data tomorrow. The bulls have been in control the past few weeks and there doesn’t seem to be anything on the horizon that would change this scenario. However, there also isn’t any data on tap that is likely to push stocks to new highs.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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