A drop in existing home sales and fresh worries on European finances sent stocks sharply lower on Tuesday even as a federal judge ruled against Obama administration’s moratorium on deepwater drilling. Stocks of oil companies dropped after the White House said it will appeal the ruling.
The Dow Jones industrials dropped the most in two weeks, closing off 1.4% at 10,294. Twenty-seven of the average’s thirty components closed lower on the day, led by a 3.7% drop in Alcoa (NYSE:AA), as enthusiasm over China’s move to let yuan move more freely dissipated. Material shares fell 2.5% on the day. Industrial sector shares closed down 2.4%, with Caterpillar (NYSE:CAT), off 3.0%, being a notable decliner.
The S&P 500 index fell below a key technical level of 1100, closing at 1095, down 1.6% on the day. The tech-heavy Nasdaq dropped 1.2% to close at 2262, as 94 of its 100 components fell on the session. Apple (NASDAQ:AAPL) shares, up 1.4%, added to the relative strength of the tech-heavy Nasdaq. Apple said it has already sold more than 3 million iPads. Amazon (NASDAQ:AMZN) dropped 0.3% after announcing that it would slash the price of its Kindle eBook reader. On the New York Stock Exchange, declining issues beat advancing shares by over three to one on volume of 1.12 billion shares.
Meanwhile, an announcement by National Association of Realtors that existing home sales dropped 2.2% in May weighed on shares of homebuilding companies. Home Depot (NYSE:HD) shares dropped 2.6% and DR Horton (NYSE:DHI) fell 3.0%. Shares in Pulte Homes (NYSE:PHM) closed down 3.2%.
All ten S&P500 industry sectors closed in the red, with five sectors registering losses of more than 2%. The White House’s decision to appeal a New Orleans judge’s ruling against the ban on deepwater drilling sent shares in oil and gas companies off 2.8%. Chevron (NYSE:CVX), a DJIA component, dropped 2.3%. Crude prices also softened reflecting the American Petroleum Institute’s inventory report of a 3.7 million build in crude stockpiles last week.
This morning’s stock futures suggest Wall Street is looking to snap two days of losses. Ahead of FOMC’s policy statement, due for a 2:15 PM ET release. Wall Street is heading towards a strong opening this morning. Ahead of the opening bell, Dow Jones industrial average futures rose 41, or 0.4%, to 10,274. Standard & Poor’s 500 index futures rose 4.70, or 0.4%, to 1,095.20, while Nasdaq 100 index futures rose 8.50, or 0.5%, to 1,886.75.
