MW: U.S. stock indexes slide after home building falls
President Bush: It will 'take a while' for financial crisis to abate
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- The roller-coaster ride in equity markets continued Friday as the U.S. reported new-home building fell to a 17-year low and President Bush discussed efforts to rescue the embattled financial system in the face of global recession.
Energy and consumer discretionary shares led the broad retreat.
The Dow Jones Industrial Average were recently off 87.62 points at 8,891.64.
The S&P 500 dropped 17.6 points to 923.4, while the Nasdaq Composite declined 13.81 points to 1,703.9.
Before the open, stock futures had extended declines as the Commerce Department estimated housing starts declined 6.3% in September, sinking to their lowest annual rate since January 1991. Read Economic Report.
A measure of consumer sentiment for October was similarly glum.
Despite the negative reaction by equities, Tony Crescenzi, bond market strategist at Miller Tabak & Co., found reason for optimism in the housing data.
"What is sorely needed in the housing market is a decrease in supply, not an increase. The downward trend in completions is good news in terms of the eventual liquidation of the excess housing supply," said Crescenzi.
Investors also weighed the latest comments on the financial crisis offered by Bush, who said it would "take a while" for the credit crunch to ease. Bush also declared the economy would eventually recover in remarks before the U.S. Chamber of Commerce. See details.
Futures had trimmed losses after a further decline in Libor, a key short-term borrowing rate, raising hopes that massive bank bailouts by European and U.S. governments will thaw frozen credit markets.
U.S. stocks closed Thursday with big gains, rallying into the close as bargain hunters stepped in following initial losses on data releases showing drops in factory output. The Dow Jones Industrial Average climbed 401 points, the Nasdaq Composite rose 89 points, and the S&P 500 added 38 points.
The automotive sector was back in the news and on investors' radar screens.
Embattled General Motors Corp. and Chrysler LLC are picking up the pace on merger talks, pushed by banks and other lenders eager to see a deal, The Wall Street Journal reported.
Bond insurers including Ambac Financial are working on a plan to send to the U.S. Treasury that would allow the firms to sell certain risky assets, Bloomberg News reported, citing Ambac's chief executive officer.
Oil futures crept off lows, up 67 cents to $70.52 a barrel. The dollar dropped against the Japanese yen, and December gold futures fell $12.60 to $791.9 an ounce.
Ahead of the opening bell, oil-services giant Schlumberger Ltd. matched expectations with third-quarter net income of $1.53 billion, or $1.25 a share, a 13% increase from the same period last year. Revenue climbed to $7.26 billion from $5.93 billion.
Also on the earnings front, Google Inc.'s shares rose more than 10% in pre-opening trade after the company Thursday posted 26% profit growth for the third quarter, topping analyst estimates after the online-search leader cut expenses.
The report "was slightly better than expectations, giving us a sigh of relief," wrote analysts Marianne Wolk and Malindi Davies at Susquehanna Financial Group. "Top-line numbers were a bit better than expected, due - surprisingly -- to better-than-expected U.S. performance, while international growth was slightly lower."
International Business Machines gave more details on its third-quarter earnings that showed a 22% profit increase, with Chief Financial Officer Mark Loughridge saying he remained "quite confident" that the company could hit its long-term goal of generating at least $10 a share in earnings for 2010.
Honeywell International Inc. said Friday it anticipates fourth-quarter earnings in the range of 97 cents to $1.01 a share, with analysts polled by FactSet Research looking for, on average, earnings of $1.04 a share.
Sony Ericsson Mobile Communications on Friday reported a smaller-than-expected third-quarter loss, with the phone-making joint venture of Japan's Sony Corp. and Sweden's Ericsson AB affirming its restructuring plan to be on track. See details.
