The major indexes see a drift lower after further economic data released this morning showed a slower pace in February new home sales stalled after snowstorms in the Northeast kept home buyers huddled inside, despite historically low mortgage rates.
The Commerce Department said new home sales fell 8.1% to a seasonally adjusted annual rate of 854,000, after an upwardly revised January sales rate of 929,000.
Sales of new homes was the lightest since August of 2000 and February's decline follows a 12.6% drop in January. February's 854,000 annual rate was well below economist's forecast of 927,000, with a 37% decline in the Northeast, where weather had shut down schools and businesses for several days, kept potential buyers indoors. Ice storms in the South were partially responsible for an 8.6% decline in that region of the country, while milder weather in the West had new home sales flat, but falling 6.3% in the Midwest.
While the major indexes did attempt a bid just after the opening of trade, it has been a slow drift lower after new home sales were released. The Dow Industrials (INDU) 8,219 -0.72% is currently lower by 56 points, with breadth negative at 24 to 6. Shares of Alcoa (NYSE:AA) $20.69 -3% and Honeywell (NYSE:HON) $21.62 -3.8% pace declines, and offset gains in Home Depot (NYSE:HD) $25.39 +1.15% and Altria (NYSE:MO) $33.79 -1.01%.
Sector action is broadly to the downside and has the S&P 500 Index (SPX.X) 869.91 -0.55% down 4.6 points. Sector weakness is found in the Forest/Paper Products Index (FPP.X) 265 -2.6% as well as both of the home construction indexes (DJUSHB) 319 -1.93% and (HGX.X) 217 -1.67%.
Technology sector are seeing a mixed trade at this hour, with the NASDAQ-100 Index (NDX.X) 1,065 -0.13% showing a fractional loss of 1.4 points. The Disk Drive Index (DDX.X) 76.03 -0.96% is the tech sector loser at this point, with shares of Advanced Digital (NASDAQ:ADIC) $7.24 -2.81% pacing declines, while sector bellwether Storage Tech (NYSE:STK) $20.17 -1.6% finds weakness for a third-straight session. Yesterday, Needham said its anecdotal checks indicated that STK's North American business was a bit soft and that the company may be struggling to meet their Q1 revenue estimates of $467 million. Needham said they were more confident in their firm's bottom-line EPS estimate of $0.11 than the consensus estimates of $0.13 per share.
Treasuries are seeing modest buying, but that is about it at this hour. I did some work on the 10-year YIELD ($TNX.X) chart and view the WEEKLY pivot of 3.943% as a near-term level of YIELD support, that if broken to the downside, might trigger a more meaningful sell in equities. However, today's low YIELD trade so far has been 3.943%, and may hint that there are still some sellers of this bond, that may indeed be looking to raise some cash that may find its way toward equities on any pullbacks.
In last night's Index Trader Wrap, one thing I think an equity bull that is looking to buy some pullback will want to see should stocks pull back to their bullish entry points, is a more "gradual" decline and not necessarily a "spike lower." A patient bull that is looking for some pullbacks doesn't necessarily mind today's action and begins to allow some time for a bit of a "soft landing" into a support level.
I do think some of the news out of Iraq that an assault on Baghdad may have been "slowed down" does have some traders taking a bit of a wait and see approach to things. From what I've been able to ascertain from various news reports, is that the coalition wants to "reinforce" their supply chains from the borders of Iraq toward Baghdad, before attempting a final assault on Saddam Hussein and his military.