Not As Good As It Could Have Been

A rather somber tone fell over Wall Street Tuesday afternoon as traders digested disheartening news from the housing sector. A report released by the National Association of Home Builders confirmed that home builders don't see a recovery in the housing market until 2008, plus, a confidence survey fell 3 points to 30 in May, equaling the low hit last September.

It was not the kind of news for which the markets were prepared. After the CPI report prior to the opening showed a rather tame increase of 0.4% for April - and 0.2 for core CPI (excluding food and energy) - traders responded with enthusiastic buying, though their buoyant mood was tempered later in the day.

The Dow, which had been up nearly 135 points early, slipped into the close with a marginal gain, though still closing at a new record high. The NASDAQ, S&P and NYSE Comp. all closed lower for the second straight day.

Dow 13,383.84 +37.06; NASDAQ 2,525.29 -21.15; S&P 500 1,501.19 -1.96; NYSE Composite 9,764.73 -0.65

Advancers were swamped by declining issues, especially on the NASDAQ, with the overall margin favoring losers by a 2-1 margin.

Unique Wedding Favors
Stylish Wedding Favors & Bridal Shower Favors
WeddingFavorstoLove.com

New highs remained somewhat steadfast, with 347 issues making new tops, though new lows continued to mount, claiming 161 on the day, the highest total in weeks.

A pullback is more likely than ever, though chances are good that the persistent problems in the housing sector are likely to spill over enough into the equities economy to cause serious problems. Any downturn is likely to be short-lived without more evidence of failing corporate profits, which have remained solid.

Oil jumped 71 cents to $63.17, and the metals also caught some of the commodity updraft. Gold gained $4.40; silver was ahead by 8 cents.

With gas prices at all-time highs at US service stations, unemployment remains historically low and the American economy, from a comparative point of view, still seems as safe and stable as ever. The myriad of problems in the general economy continue to appear manageable and pose little threat to US stocks, especially, as it seems, those of the blue chip variety.