Housing numbers bother investors

NEW YORK | A disappointing report on housing starts made investors nervous about the economy Tuesday and sent stocks lower even as profits at many companies exceed expectations.

The major indexes slipped about half a percent, and the Dow Jones industrials lost 50 points.

Stocks retreated from 2009 highs after the Commerce Department said applications for home-building permits fell in September by the largest amount in five months. That is a discouraging signal for future construction.

A rebound in the dollar from 14-month lows against other major currencies also hurt stocks by driving down commodities prices and, in turn, sending energy and materials companies lower. Bond prices rose after the government said wholesale prices fell last month.

The housing data and the stronger dollar overshadowed strong earnings reports from Apple Inc., Caterpillar Inc. and health insurer UnitedHealth Group Inc.

Earnings are likely to dominate trading Wednesday. After the close of Tuesday’s trading, Yahoo Inc. and SanDisk Corp. turned in profits that were well ahead of analyst expectations. The stocks gained in after-hours electronic trading.

Even with concerns about the economy, Tuesday’s drop was modest and not unexpected because stocks rocketed higher with little break for seven months.

Schaeffer’s Investment Research analyst Todd Salamone said the market’s ability to avoid a big slide is encouraging.

“We’ve got a report that’s disappointing, and the bears haven’t really gained control here,” he said. “It’s a good excuse just to take a breather.”

The Dow fell 50.71, or 0.5 percent, to 10,041.48.

The broader Standard & Poor’s 500 Index fell 6.85, or 0.6 percent, to 1,091.06. The index, the basis of many mutual funds, is up 61.3 percent from a 12-year low in early March.

The Nasdaq Composite Index fell 12.85, or 0.6 percent, to 2,163.47.

Treasury prices rose, pushing their yields lower, after the Labor Department said wholesale prices fell in September, leaving a larger-than-expected monthly drop in the Producer Price Index. The yield on the 10-year Treasury note fell to 3.34 percent from 3.39 percent late Monday.

Crude oil lost ground for the first time in a week, falling 52 cents to settle at $79.09 a barrel on the New York Mercantile Exchange. Oil rose to $80.05 during the day, its highest level in a year.

Investors dumped shares of home builders after the report of a 1.2 percent drop in applications for housing permits. Pulte Homes Inc. fell 53 cents, or 5 percent, to $10.08, while Hovnanian Enterprises Inc. fell 18 cents, or 4.6 percent, to $3.76.

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