Stocks Finish Mixed on Home Sales Drop

A report sparks worries that housing and the economy might be worse than expected, while oil prices spiked on geopolitical worries

Stocks finished mixed, well above the session lows Monday after a report showed a fall in new home sales to a 7-year low, which suggests the economy and housing situation are worse than expected, says S&P.

The Dow Jones industrial average ended a five-day winning streak, with a decline of 11.94 points, or 0.1%, to 12,469.07. The broader Standard & Poor's 500 index edged up 1.39 points, or 0.1%, to 1,437.5. The tech-heavy Nasdaq composite rose 6.7 points, or 0.27%, to 2,455.63.

In economic news, February new home sales, which was expected to rise to 1.0 million, fell another 3.9% to a 848,000 pace in February, after tumbling 15.8% to a revised 882,000 million rate in January (937,000 initially). That contradicts expectations for a rebound, but this could be another weather story given the poor conditions in much of the U.S. last month, says Action Econmomics. The median price rose to $250,000, vs. $243,200 in January, but is down 0.3% year-over-year. "This may feed back into worries that the subprime market is sparking tighter credit conditions and slower lending and new housing demand, though the weather may be to blame," says Action Economics.

Tuesday's report for consumer Confidence is expected to drop to 108.5 from February's stronger than expected level of 112.5.

Later in the week, reports on durable goods (Wednesday) and Friday's personal income, PCE Deflator, Chicgo PMI, and construction spending will be just as important, says S&P.

But the market will be mostly focused on what Federal Researve Chairman Ben Bernanke tells the Joint Economic Committe Wednesday about what the Fed meant in last week's statement that left investors confused about its bias, says S&P.

Among companies in the news Monday, Citigroup (C) is establishing a restructuring plan that could involve 15,000 job cuts and a charge of more than $1 billion, according to The Wall Street Journal.

Dell (DELL) shares were upgraded by Goldman to buy from neutral.

In deal news, Beckman Coulter (BEC) agreed to acquire Biosite for $85 a share, in a deal valued at about $1.55 billion. Biosite shares surged on the news.

A few stocks rallied on drug news. Alexza Pharmaceuticals (ALXA) says its AZ-001 Phase IIb trial met primary endpoint of 2-hour pain relief in patients with migraine headache. Also, its AZ-004 Phase IIa trial met primary endpoint in treating schizophrenic patients with acute agitation.

Osiris Therapeutics (OSIR) says six-month trial results for Provacel, a stem cell therapy for heart disease, showed heart attack patients had significantly lower rates of adverse events and significant improvements in heart, lung, and overall condition.

In the energy markets, May NYMEX crude oil was up 69 cents at $62.97 a barrel, and hit highs of the year, amid geopolitical concerns. Iran is still holding 15 U.K. sailors hostage, while fresh U.N. sanctions for failure to suspend its nuclear program voted over the weekend have only resulted in Iran vowing it would continue its nuclear work, says Action Economics. In addition, front-month gasoline rallied over 7 cents/gallon to end at fresh seven-month highs of $2.07.

European stock markets finished lower Monday. In London, the FTSE-100 index fell 47.5 points, or 0.75%, to 6,291.9. Germany's DAX index lost 70.24 points, or 1.02%, to 6,828.82. In Paris, the CAC 40 index was down 58.45 points, or 1.04%, to 5,576.3.

Asian markets posted small gains Monday. In Japan, the Nikkei 225 index rose 41.35 points, or 0.24%, to 17,521.96. In Hong Kong, the Hang Seng index gained 73.21 points, or 0.37%, to 19,765.85.

Treasury Market

Treasury prices turned higher Monday following news of the continued slump in new home sales, which bucked the trend of firmer housing starts and existing home sales in the month, says Action Economics. Relatively hawkish comments from Fedspeakers over the weekend also set up yields for a fall, says Action Economics. Late in the session, a letter to lawmakers from Chairman Bernanke downplayed risks from China's reserve accumulation, says Action Economics. The 10-year yield fell to 4.587%.