BLBG: U.S. Stocks Fluctuate After Unexpected Gain in Housing Starts
U.S. stocks drifted between gains and losses as an unexpected rebound in homebuilding offset Alcoa Inc.’s dividend cut and analyst Meredith Whitney’s prediction that banks’ earnings may miss their forecasts.
Centex Corp. led a rally in construction companies after housing starts unexpectedly climbed 22 percent in February, the biggest jump since 1990. Alcoa slumped 10 percent on plans to sell stock and convertible notes as the largest U.S. aluminum company braces for a second straight quarterly loss. Bank of America Corp. fell 2.9 percent after Whitney told CNBC that the bank’s profit forecasts “may come back to haunt them.”
The Standard & Poor’s 500 Index slipped 0.1 percent to 753.38 at 9:39 a.m. in New York. The Dow Jones Industrial Average slipped 6.69 points, or less than 0.1 percent, to 7,210.28. The Russell 2000 Index added 0.1 percent.
“The economy is no longer in a free fall,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.5 billion in Elmira, New York. “Housing is showing signs of stabilization, which should help firm up the equity markets.”
The S&P 500 has declined 16 percent in 2009, rising in only two of 10 weeks this year, as mounting losses at banks raised concern the government would be forced to nationalize some lenders. The index lost 38 percent in 2008, its worst year since the Great Depression.
Stocks in the U.S. yesterday fell for the first time in five days as a rally in financial companies was snuffed out by concern over rising credit-card defaults, while SanDisk Corp. led a slump in technology shares.
Alcoa Slumps
Alcoa slid 63 cents to $5.49. The company said it will slash its dividend to 3 cents a share from 17 cents and cut costs to conserve cash.
Morgan Stanley lost 2.8 percent to $22.40 as the stock was downgraded to “underperform” by Bank of America Corp. analyst Guy Moszkowski, who cited concern over the bank’s commercial real estate holdings.
Cisco Systems Inc. gained 1.5 percent to $15.68. Goldman Sachs Group Inc. added the world’s largest maker of networking equipment to its “conviction buy” list, citing the introduction of its so-called blade platform.
