MARKETS-GLOBAL
OCTOBER 30 2007 17:46h
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Oil prices fell sharply from record highs and gold declined from a 28-year peak. U.S. Treasury bond prices were little changed.
Oil prices fell sharply from record highs and gold declined from a 28-year peak. U.S. Treasury bond prices were little changed.
Investors sold stocks after U.S. Steel reported a 35 percent drop in third-quarter profit, worse than analysts had expected. Home builders' shares also slipped after the Standard & Poor's/Case Shiller index showed prices of single-family homes in August posted the biggest year-over-year decline since 1991.
Also weighing on stocks was a Wall Street Journal report casting some doubts on a widely expected rate cut when the Fed ends a two-day meeting on Wednesday.
"The whole bull case is based on the Fed saving everybody," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. "If there's a cut tomorrow, they will possibly talk a little tougher in the statement and not lead the market into thinking they're going to do it again in December."
Stocks had been bolstered recently by expectations that the Fed would cut rates at least one-quarter point to 4.50 percent, with futures suggesting a small chance of a half-point cut.
But the Wall Street Journal's Fed watcher Greg Ip, known for sometimes reflecting the views of senior central bankers, said the housing slump has not been severe enough to alter the Fed's outlook of a return to moderate growth next year.
A quarter-point cut is not a sure thing and officials are not seriously considering a half-point cut, he said.
The Dow Jones industrial average fell 56.25 points, or 0.41 percent, to 13,814.01. The Standard & Poor's 500 Index slid 8.00 points, or 0.52 percent, to 1,532.98. The Nasdaq Composite Index dropped 5.01 points, or 0.18 percent, to 2,812.43.
TREASURIES, DOLLAR LITTLE CHANGED
Rate-cut expectations recovered somewhat on weak consumer confidence data, but not enough to lift Treasury prices.
The benchmark 10-year Treasury note was down 2/32 in price, yielding 4.40 percent, up from 4.39 percent late on Monday.
The 2-year U.S. Treasury note was down 1/32, with the yield at 3.82 percent, up from 3.81 percent late on Monday. The 30-year U.S. Treasury bond was down 7/32, with the yield at 4.68 percent, up from 4.67 percent late in the previous session.
The Conference Board on Tuesday said its index of consumer sentiment fell to its lowest level in two years on growing concerns about weakening business conditions.
The weak confidence data also weighed on the dollar, which was little changed against the euro and a major currency basket after paring some earlier gains.
The U.S. Dollar Index eased 0.05 percent to 76.797 from a previous session close of 76.837.
The euro was up 0.01 percent against the dollar at $1.4425 from a previous session close of $1.4423.
Against the Japanese yen, the dollar was down 0.04 percent at 114.64 from a previous session close of 114.69.
The dollar had earlier rebounded from the previous day's record lows on reduced expectations of a rate cut. Lower interest rates trim the relative appeal of dollar assets versus higher-yielding foreign securities.
European stocks extended losses, tracking the decline in U.S. shares. The FTSEurofirst 300 index fell 0.5 percent, or 7.27 points, to 1,581.04.
Japan's Nikkei average fell 47.07 points, or 0.3 percent, to end the day at 16,651.01.
In contrast, Hong Kong's benchmark Hang Seng Index ended at 31,638.22, its highest-ever closing level.
Crude oil futures fell on news that Mexico may reopen shut oil ports and on profit-taking after Monday's rally. U.S. light sweet crude oil fell $1.43, or 1.53 percent, to $92.10 per barrel on the New York Mercantile Exchange.
Spot gold prices fell $7.95, or 1.01 percent, to $783.05. On Monday, spot gold hit $794.40, the highest since January 1980 when it hit a record high of $850.
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