Stocks Are Off as Housing Takes a Breather

Stocks are broadly lower today as downbeat results from the housing sector weigh on homebuilders and equipment manufacturers. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down by 37 points, or 0.26%.

Housing takes a breather
Data released by the Department of Commerce today suggested that the housing market took a breather in January. Housing starts fell by 8.5% compared to the revised December estimate -- though, on a year-over-year basis, they grew by an impressive 23.6%.

These results are generally in line with a survey released yesterday reporting that sentiment among homebuilders has taken a turn for the worse. The National Association of Home Builders/Wells Fargo Housing Market Index fell to 46 this month from a reading of 47 in January -- anything below 50 indicates a generally pessimistic view.

Also out today were earnings from Toll Brothers (NYSE: TOL  ) , the nation's largest luxury-home builder. For the three months ended Dec. 31, net income at the company came in at $4.4 million, or $0.03 per share. Although this was an improvement over the same quarter in 2011, in which Toll Brothers earned $2.8 million, it came up short of estimates. Analysts surveyed by Bloomberg had expected EPS of $0.10 -- more than three times the actual figure.

Toll Brothers CEO Douglas Yearley nevertheless struck an upbeat tone, saying that "demand has increased" and that it "appears that momentum is building."

On the heels of this news, shares of homebuilders are broadly lower today. At the time of writing, Toll Brothers is down 5.9%, Lennar is off 4.3%, and PulteGroup is lower by 4.5%.

In terms of Dow components, the best-performing stock on the blue-chip index is Boeing (NYSE: BA  ) . The aerospace company has struggled of late after is flagship 787 Dreamliner aircraft was grounded by aviation authorities around the world due to a series of battery fires. As my colleague Dan Caplinger observed this morning, shares in the company are rebounding following reports that the company "may have found a way to solve [these] problems." Also working in Boeing's favor, the company's engineers have purportedly approved a new labor contract, improving the odds that it will avoid a labor strike.

Conversely, one of the worst-performing stocks on the Dow today is Caterpillar (NYSE: CAT  ) . Given Caterpillar's line of business -- that is, mining and construction equipment -- and the downbeat results from the housing sector, it's unsurprising that its shares are trading lower. Near the end of the trading session, they're off by 1.9%.

Want to learn more about Caterpillar?

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in our brand new report. Just click here to access it now.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2266534, ~/Articles/ArticleHandler.aspx, 12/20/2014 10:35:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement