Stocks dropped again Tuesday as tech and financials sagged and Germany imposed a partial ban on short-selling. That overshadowed stronger housing data that pointed to an ongoing recovery.
The Dow Jones Industrial Average closed down 115 points at 10511. The S&P 500 finished down 16 at 1120 and the Nasdaq ended down 37 at 2317.
Late in the session, Germany’s financial markets regulator said it will ban naked short-selling of certain euro-zone debt and credit default swaps as well as some financial stocks. That means those securities can’t be sold short if they are not borrowed in advance. It will remain in effect until March 31, 2011. The move, which was seen as largely symbolic, was viewed as a trade-off for Germany’s support for the nearly $1 trillion bailout of weaker euro-zone economies. The dollar strengthened against the euro, which dropped to $1.2204 from $1.2392 on Monday. The U.S. Dollar Index rose 1.08%.
The Commerce Department said housing starts climbed 5.8% to a seasonally-adjusted 672,000 annual rate compared with March, beating economists’ expectations. But building permits—a sign of future construction— decreased 11.5% to a 606,000 annual rate, when economists had expected permits to drop only 0.4%.
Meanwhile, U.S. wholesale prices edged lower in April as energy prices dropped. Overseas, U.K. CPI ran a faster-than-forecast 3.7% in April, while euro-zone inflation rose 1.5%. Core CPI was 0.8% in the 16-nation euro bloc. Data last week showing that core inflation turned negative in Spain rattled the market.
Hewlett-Packard (HPQ) reported fiscal second-quarter earnings of $1.09 a share, up 27% from 86 cents a year ago. Advance pessimism pushed the technology sector down in late trading.
One day after home-improvement retailer Lowe’s (LOW) disappointed investors, Home Depot (HD) gained after its fiscal first-quarter earnings jumped a better-than-expected 41% as strength in seasonal items and improved profitability aided results.
European markets bounced back, though they closed off their highs. London’s FTSE was up 0.9%, the German DAX was up 1.5% and the CAC in Paris was up 2.1%. The Shanghai Composite bounced back after Monday’s hammering, rising 2%.
Dow Jones Newswires contributed to this report.
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