Stocks turned lower Thursday after data showed new home sales plunged 8.5% in March. Also, weak profit news from Amazon.com (AMZN), Starbucks (SBUX) and Whirlpool (WHR) raised worries about U.S. consumer spending, but data on durable goods and jobless claims gave some stocks a boost.
New home sales slowed to a weak pace of 526,000 in March, from 575,000 in February. Eleven months of new homes are sitting on the market, the largest inventory since Sept. 1981, while the median sales price fell from 4244,200 to $227,600.
On Thursday, dozens of major companies reported results from the first three months of 2008. "Earnings results seem to be mixed so far overall," says Jay Collins of DT Trading, "but, we are definitely seeing guidance pointing to a rocky road ahead as the future quarters keep getting pared back on their projections."
Late Thursday morning, the Dow Jones industrial average fell 42.42 points, or 0.33%, to 12,720.80. The broader S&P 500 dropped 6.71 points, or 0.49%, to 1,373.22. The tech-heavy Nasdaq composite index was down 15.12 points, or 0.63%, to 2,390.09.
U.S. durable goods slipped 0.3% in March, after a 0.9% decline in February. Also, U.S. jobless claims fell 33,000 to 342,000 last week, from 375,000 the week before. "These data ... suggest the economy is not as bad as many fear," says Action Economics. However, John Ryding, economist at Bear Stearns, said the durable goods report "does not change the picture of a weak manufacturing sector."
Oil prices were falling on Thursday. On the NYMEX, June crude oil was down $1.67 to $116.63 per barrel.
Among stocks in the news Thursday, Wendy's International (WEN) agreed to be acquired by the Triarc Companies (TRY), which owns Arby's, in a $2.34 billion all-stock deal. Wendy's also posted earnings of 10 cents per share, down from 16 cents a year ago.
Ford Motor (F) unexpectedly posted a narrow profit Thursday, reporting earnings of 5 cents per share, vs. a 15-cent loss a year ago. Revenue rose 1.2%.
Apple (AAPL) posted earnings of $1.16 per share, vs. 87 cents a year ago, as revenue rose 43%. International sales made up 44% of the quarter's revenue, and gross profit margins narrowed.
Amazon.com (AMZN) posted earnings of 34 cents per share, vs. 26 cents a year ago, as sales rose 37%. However, the company reportedly warned investors that profit margins will narrow in 2008.
Starbucks (SBUX) shares were tumbling after the company said it expects earnings of 15 cents per share in the second quarter and 12% revenue growth. The company's U.S. same-store sales declined.
3M (MMM) posted earnings of $1.38 per share, vs. $1.28 a year ago, as sales rose 8.9%.
Motorola (MOT) reported a loss of 9 cents per share, vs. a 9 cents loss a year ago, as revenue fell 21%.
Whirlpool (WHR) reported earnings of $1.22 per share, vs. $1.55 a year ago. The home appliances maker cited higher material costs, oil-related price inflation and negative growth in demand in the U.S.
LAM Research (LRCX) reported earnings of 82 cents per share, vs. $1.15 a year ago, as revenue fell 5.6%.
Northrop Grumman (NOC) posted earnings of 76 cents per share, vs. $1.10 a year ago, as sales rose 6%. The company lowered profit guidance for the full year by 60 cents per share, but raised its quarterly dividend from 37 to 40 cents per share.
Aetna (AET) posted earnings of 92 cents, vs. 81 cents a year ago, as revenue rose 16%. It reaffirmed previous profit guidance.
Range Resources (RRC) reported earnings of just 1 cent per share, vs. 51 cents a year ago, even as oil and gas sales rose 41%.
Hershey Company (HSY) posted earnings of 37 cents per share, vs. 51 cents a year ago.
Major European indexes were lower Thursday. In London, the FTSE 100 index fell 1.47% to 5,994. Paris' CAC 40 index lost 1.13% to 4,888.79, and Germany's DAX index fell 0.21% to 6,780.63.
In Asia, Japan's Nikkei 225 was off 0.28% to 13,540.87, while Hong Kong's Hang Seng index gained 1.55% to 25,680.78.
Treasury market
Treasury prices were falling on Thursday. Two-year notes were down 05/32 to 99-22/32 for a yield of 2.29%; the 10-year Treasury fell 15/32 to 97-20/32 for a yield of 3.79%; and the 30-year bond was down 27/32 at 97-07/32 for a yield of 4.54%.