U.S. Stocks Fall on Home Sales, Jobless Claims

Mayank Mehta
24 Sep, 2009
New York City

U.S. stocks edged lower as investors digest latest home sales report and await signs of Fed pull back from its economic stimulus program. Jobless claims decreased 21,000 last week. A123 Systems prices its initial public offering above its initial pricing range.

[R]11:05 AM New York – U.S. stocks edged lower as investors digest latest home sales report and await signs of Fed pull back from its economic stimulus program. Jobless claims decreased 21,000 last week. A123 Systems prices its initial public offering above its initial pricing range.[/R]

U.S. stocks in early trading fell after home sales declined in August. Crude oil dropped 4% to $66.18 a barrel and gold price decreased $17.40 to $997.10.

A sharper than expected decline in home sales and home prices dragged home builders lower. Lennar, D R Horton and Toll Brothers edged lower. Standard Pacific Corp dropped 6%.

Jobless claims in the last week decreased 21,000 from the revised 551,000 claims in the previous week. Preliminary unemployment rate decreased 0.1 percentage point to 4.6%.

Existing home sales fell 2.7% in August after increasing 7.2% in July according to the National Association of Realtors. The seasonally adjusted home sales in the month were 5.1 million units, lower than 5.24 million in July. Sales were 3.4% higher from a year ago month.

Median home price in the month fell 12.5% from a year ago to $177,700. Midwest led the home sales decline with 6.6% fall.

Unsold home inventories declined 10.8% to 3.62 million units which represents 8.5 month supply, down from a 9.3 month supply in July and 16.4% lower.

A123 Systems Inc priced 28.1 million shares at $13.50 each and raised $378 million. The electric vehicle battery maker increased its offering size by 2.4 million shares and priced above its initial filing range between $9 and $9.50.

Gainers & Losers

Copart Inc ((CPRT)) decreased 4.8% to $36.41 after it reported lower than expected earnings and revenues. Adjusted earnings in the quarter were 41 cents a share.

Nomura Holdings Inc ((NMR)) declined 13.5% to $6.63 after the company is preparing to raise as 511 billion yen ($5.6 billion) according to media reports in Tokyo.

Sony Corp ((SNE)) increased 2.6% to $28.88 after the company plans to lower game console PlayStation prices by 15% in Japan from next month. The company lowered 25% prices in Europe and U.S. by 25% according to the comments by Kazuo Hirari, head of the company business unit and reported by Bloomberg.

Earnings Review

Bed Bath & Beyond Inc, the housewares retailer said second quarter sales rose 3.2% to $1.91 billion from $1.85 billion a year ago. Net income in the quarter rose 13.6% to $135.5 million or 52 cents per diluted share compared to net income of $119.3 million or 46 cents per share a year ago.

Cintas Corporation, the corporate uniform supplier said first quarter revenues fell 11% to $891.6 million from $1 billion a year ago. Net income in the quarter fell 31.3% to $54 million or 35 cents per diluted share compared to net income of $78.6 million or 51 cents per share a year ago.

Paychex, Inc, the payroll and personnel services provider said first quarter revenues fell 6.3% to $500.2 million from $534.1 million a year ago. Net income in the quarter fell 17% to $123.6 million or 34 cents per diluted share compared to net income of $148.7 million or 41 cents per share a year ago.

Red Hat Inc, the software distributor said second quarter revenues rose 11.7% to $183.6 million from $164.4 million a year ago. Net income in the quarter rose 37% to $28.9 million or 15 cents per diluted share compared to net income of $21.1 million or 10 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 173.68 or 1.67% to 10,544.22, Hang Seng index in Hong Kong decreased 544.79 or 2.52% to 21,050.73 and CSI 300 index in China higher 20.86 or 0.68% to 3,080.93. ASX 200 index in Australia decreased 32.90 or 0.69% to 4,701.20. The FTSE Bursa KL Composite index in Malaysia was lower 1.01 or 0.08% to 1218.06.

The Kospi Index in South Korea decreased 17.59 or 1.03% to close at 1,693.88. SET index in Thailand closed lower 1.98 or 0.27% to 728.54. JSE Index in Indonesia increased 11.92 or 0.48% to 2,468.90.The Sensex index in India increased 61.93 or 0.37% to 16,781.43.

Europe Markets Review

In London FTSE 100 Index traded lower 5.24 or 0.10% to 5,134.13, in Paris CAC 40 Index decreased 12.25 or 0.32% to 3,809.54 and in Frankfurt DAX index traded lower 17.59 or 0.31% to 5,684.46. In Zurich trading SMI decreased 32.07 or 0.51% to 6,317.76.