The Joplin Globe, Joplin, MO

Business

July 25, 2013

Housing stocks fall, Facebook jumps on Wall Street

NEW YORK — Disappointing results from PulteGroup, D.R. Horton and other home builders left major stock indexes with only tiny gains in afternoon trading. Technology stocks rose after Facebook’s earnings blew past analysts’ estimates.

Even with plenty of news from big companies, the broader market was mixed. Of the 10 industry groups in the Standard & Poor’s 500 index, five rose and five fell.  

D.R. Horton, the country’s largest builder, and PulteGroup said orders for new houses jumped in the second quarter, but their results still fell short of what analysts had expected. PulteGroup also posted a 14 percent decline in profits

D.R. Horton dropped $1.77, or 8 percent, to $19.45. PulteGroup lost $1.95, or 11 percent, to $16.49.

“Housing is taking it on the chin,” said JJ Kinahan, chief derivatives strategist at TD Ameritrade. “I think what you’re seeing a bit of today is people questioning what higher mortgage rates mean for housing.”

Technology companies fared better. Facebook jumped 27 percent after reporting earnings late Wednesday that easily beat analysts’ forecasts thanks to higher revenue from advertisements on mobile devices. Facebook’s stock rose $7.16 to $33.68.

The Standard & Poor’s 500 index was up two points, or 0.1 percent, to 1,688 as of 2:30 p.m.

The Dow Jones industrial average rose two points, or 0.01 percent, at 15,543. The Dow was held back by Caterpillar, which warned of sagging sales on Wednesday.

The Nasdaq composite index rose 17 points, or 0.5 percent, to 3,596.

It’s nearly halfway through the second-quarter earnings season, and the overall trend looks good, but not great, said Tyler Vernon, chief investment officer of Biltmore Capital in Princeton, NJ. “There have been some big disappointments, like Caterpillar yesterday, but we’re seeing better and better numbers coming out.”

Analysts forecast that companies in the S&P 500 index will report earnings growth of 4.3 percent over the same period last year, according to S&P Capital IQ. At the start of July, the forecast was for growth of 2.8 percent. More than six out of every 10 companies have cleared analysts’ earnings targets so far.

Eventually, improving profits should help push the S&P 500 index above 1,700 in the coming weeks, Vernon said.

In the market for U.S. government bonds, the yield on the 10-year Treasury note climbed to 2.62 percent from 2.59 percent the day before. Late last week, it was trading at 2.48 percent.

The 10-year yield acts as a benchmark rate for most mortgage loans. A sharp increase in the rate drives up mortgage costs and could slow down sales in the housing market.

It’s still very low by historical standards thanks in large part to the Federal Reserve’s massive bond-buying program. The yield hit a recent low of 1.63 percent on May 3. By contrast, it was trading around 4 percent in the summer of 2008, shortly before the worst days of the financial crisis.

Among other stocks making big moves:

— Las Vegas Sands, a major casino operator, fell $1.25, or 2.3 percent, to $53.69 after it posted lower revenue and income than financial analysts had expected.

— Harley-Davidson rose 40 cents, or 1 percent, to $56.27 following news that the Milwaukee-based motorcycle maker’s earnings rose 10 percent in the second quarter, driven by an aggressive expansion abroad and revamped production.

— Visa rose $8.06, or 4 percent, to $194.78. Visa returned to profitability in its third fiscal quarter and reported strong revenue growth as the company processed more transactions worldwide.

 

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