Dow Sacrifices Early Gains on Soft Housing Data, Central Bankers

Weighed by soft housing market data and remarks from the world’s most important central bankers, the Dow Jones Industrial Average unravelled its early gains and is struggling to snap a six-day losing streak. The S&P 500 is clinging to a slim gain while the Nasdaq set another record high on strength in the technology sector.

Stocks were trending higher into the open as bargain hunting coupled with Chinese efforts to reassure risk adverse investors with more liquidity drove Dow futures more than 100 points higher in premarket.

Investors’ enthusiasm started to evaporate on the unexpected 0.4% drop in existing home sales to a four-month low of 5.43 million. Higher housing costs translated into declining purchases by first-time homebuyers and falling sales for less expensive properties. Recent developments in the housing market led National Association of Realtor’s chief economist Lawrence Yun to warn “the housing affordability issue is becoming a crisis.”

Early gains were also compromised by remarks from Fed chairman Jerome Powell, European Central Bank president Mario Draghi and Bank of Japan governor Haruhiko Kuroda at a banking conference in Sintra, Portugal. The three weighed in on issues ranging from trade to wage growth though it was Powell and Draghi who spooked market participants by making the case for tighter monetary policy.

In corporate news, shares of General Electric (GE) continue to lose ground following a decision to kick the conglomerate from the blue chip index.

The bidding war for the entertainment assets of 21st Century Fox (FOX, FOXA) took another turn with Disney’s (DIS) superior $71.3 billion cash and stock offer, topping Comcast’s (CMCSA) $65 billion bid.

European markets were generally insulated from the drift lower on Wall Street with all but France’s CAC-40 ending higher. Gains were led by gains in tobacco stocks from a positive analyst note.

Crude oil was up $1.33 to $66.40 per barrel. Natural gas was up $0.06 to $2.96 per 1 million BTU. Gold was down $2.70 to $1,275.80 an ounce, while silver was down $0.008 to $16.31 an ounce. Copper was down $0.02 to $3.03 per pound.

Among energy ETFs, the United States Oil Fund was up 0.68% to $13.23 with the United States Natural Gas Fund was up 1.40% to $23.98. Among precious-metal funds, the Market Vectors Gold Miners ETF was down 0.13% to 22.06 while SPDR Gold Shares was down 0.16% to $120.61. The iShares Silver Trust was unchanged at $15.36.

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