Wall Street Higher, Home Sales Weak; Greek Crisis Drags On

Devan Biswas
26 Sep, 2011
New York City

U.S. indexes attempted a rebound after a week of decline. Commodities traded mixed and oil rose 1.5%. New home sales declined in August and median prices fell. European markets closed higher on the hopes Greek crisis may be contained and Asian markets extended losses.

[R]1:00 PM New York – U.S. indexes attempted a rebound after a week of decline. Commodities traded mixed and oil rose 1.5%. New home sales declined in August and median prices fell. European markets closed higher on the hopes Greek crisis may be contained and Asian markets extended losses.[/R]

The U.S. indexes traded sideways and attempted to rebound after a weekly loss of more than 6%. World markets were mixed with the markets in Europe scaling higher and in Asia continued to decline.

The talks in Washington focused on Greece and the response of the European leader in the next five weeks is critical in how Greek crisis expands. The European policy makers are inching towards offering a stronger response to Greek default and may ask banks to recapitalize and find ways to contain the crisis from growing.

So far the talks have not led the concrete steps that calmed the markets.

Greek bailout talks took another twist after the Deputy Finance Minister of Germany Joerg Asmussen said Sunday in Washington that Greece may have to wait after October 3 meeting to access the next tranche of 8 billion euros.

The whirlwind of talks in Washington over the weekend failed bring a new consensus among the policymakers as the U.S. corralled European leaders to find a quick solution to Greek crisis.

The market sentiment is forecasting the Greek debt default and banks may be paid less than 40 cents on the dollar compared to the current bailout agreement of swap of 80 cents. The Greek populous sentiment is sliding in the favor of a total default or even Greece exiting the euro zone, once unthinkable only a year ago.

Market indexes in Hong Kong extended losses for the second day by 1.5% to 6.2% losses and in India fell 0.7%.

Markets in Tokyo dropped 2.2% and the index in the export driven economies like South Korea plunged 1.8% and in Taiwan declined 2.4%. Markets in Thailand plunged 5.7% and in Indonesia dropped 3.2% and in Singapore fell 1.7%.

New Homes Sales Drop to 6-month Low

Seasonally adjusted new home sales in August decreased 2.3% to 295,000 and increased 6.1% from a year ago. The July annual sales rate was revised higher to 302,000 from 298,000 estimate earlier according to the Commerce Department data released today.

The median sale price of new homes sold in the month declined to $209,100 and average price fell to $246,000 with ten months of inventory. The median price declined from a year ago month price of $226,600.

The number of new homes in the market dropped to the lowest since the data collection began in 1983 to 162,000 units.

U.S. Stock Movers

Apple Inc ((AAPL)) declined more than 2% after a research note from JP Morgan suggested that parts suppliers in Asia are scaling back the production by 25% for iPad from the previous quarter.

Eastman Kodak ((EK)) plunged 24% to $1.82 after the company tapped its credit line of $160 million.

UBS AG ((UBS)) soared 4% to $11.69 after the company chief executive Oswald Grubel was forced to resign after the company’s London trading desk lost $2.3 billion last week in unauthorized transactions.

Home builders were in the crosshair after the release of the new home sales data. Lennar Corp ((LEN)) decreased 10 cents to $13.30 and D R Horton, Inc ((DHI)) increased 11 cents to $9.28.

McGraw Hill Companies, Inc ((MHP)) decreased 49 cents to $42.44 after the company’s rating division S&P received a Wells notice related to one of collateral obligation debt issued at the time of the financial crisis in 2007. The formal notice allows the S&P to make its case against the civil legal action and fines.