Stocks swung between gains and losses in the final two hours of trading before ending mixed as the Federal Reserve assumed a cautious tone in its take on the economy. While keeping the key fed funds rate at historic lows, the policymakers noted that the financial conditions were less supportive now, given developments abroad.
Earlier, stocks fell sharply after a Commerce Department report said new home sales dropped almost 33% to an annual rate of 300,000 in May, the lowest since record keeping began. Housing bothered the policymakers too as they noted “housing starts remain at a depressed level.” Despite the weakness in market and the new home sales report, homebuilder shares managed to move higher, with PulteGroup (NYSE:PHM) shares rising 2.1% and DR Horton (NYSE:DHI) adding 2.5%.
This morning’s stock futures suggest some weakness. Dow Jones industrial average futures are down 47 points, or 0.5%, at 10,192. Standard & Poor’s 500 index futures are down 5.90, or 0.5%, at 1,081.50, while Nasdaq 100 index futures are down 13.75 points, or 0.7%, at 1,860.00.
Crude prices dropped $1.13 to $76.72 after a report showed an unexpected build in crude supplies. Lower crude prices were a drag on energy shares. Energy stocks, as a group, fell 1%, with Chevron (NYSE:CVX) shares falling 2.4% and Exxon (NYSE:XOM) dropping 1.4%. Offshore drillers weakened on reports of fresh drilling moratorium in the coming weeks. Rowan (NYSE:RDC) shares dropped 3.3%; Pride International (NYSE:PDE) fell 2.7%; ENSCO PLC (NYSE:ESV) declined 2.2%.
After Tuesday’s largest single-session drop in two weeks, the Dow industrials managed to close with a gain of 5 points at 10,298. The widely tracked S&P500 retreated 0.3% to 1092, remaining below the 1100 mark. The tech-heavy NASDAQ shed 0.3% to close at 2254. The CBOE Vix, the market’s measure of volatility, retreated below 27. On the New York Stock Exchange, 1.1 billion shares changed hands as declining issues outpaced advancing shares by an eight to seven margin.
Wells Fargo (NYSE:WFC), meanwhile, warned weaker investment banking volume in the second quarter will impact results for Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS). On Tuesday, William Blair had lowered quarterly estimates for Goldman and Morgan Stanley.
