- The Washington Times - Wednesday, December 24, 2008

Weak economic news, chiefly in the housing sector, pushed Wall Street onto negative ground during light holiday-week trading Tuesday.

At the close, the Dow Jones Industrial Average dropped 100.28, or 1.18 percent, to 8,419.49. The Nasdaq, loaded with technical stocks, sank 10.81, or 0.71 percent, to 1,521.54. The broader Standard & Poor’s 500 fell 8.48, or 0.97 percent, to 863.15.

Reflecting the worsening economic news because of less demand, but a bright spot for consumers, oil prices dribbled below $39 a barrel for February delivery, about 73 percent below its high of more than $147 a mere five months ago.

The markets opened in positive territory but sank throughout the day, with ups and downs, as they digested the news about the recession.

Ryan Detrick, senior technical strategist with Schaeffers Investment Research in Cincinnati, pegged the markets’ fall to weak economic data across the board, but took the negative showing “with a grain of salt” because “volume is very, very light.”

“There aren’t many people voting” by buying and selling shares, he told The Washington Times. “Things are kind of slow.”

The worst news came from the housing sector. The National Association of Realtors reported that the median sales price of existing homes virtually fell off a cliff in November, plunging 13.2 percent to $181,300 from $208,000 a year ago.

It marked the lowest price since February 2004 and the biggest year-over-year fall since 1968, the Realtors said.

Further, sales of existing homes fell 8.6 percent in November to an annual rate of 4.49 million from a downwardly revised pace of 4.91 million in October, the association said.

At the same time, the Commerce Department reported that the seasonally adjusted sales of new single-family homes fell to 407,000 in November, a drop of 2.9 percent from October, to their lowest level since January 1991, a time of recession.

In a separate report, Commerce confirmed that the economy contracted by 0.5 percent during the third quarter ended Sept. 30.

The news did not come as a surprise, but the drop in the gross domestic product was the worst in the July-through-September period since the third quarter of 2001, which ended a few weeks after 9/11.

The retail picture, as expected because of the recession, also was not bright.

America’s Research Group and UBS, a global financial-services firm, said a survey showed that only 38.7 percent of Americans ventured out shopping last weekend, the final one before Christmas - the lowest turnout in six years.

The continuing decline in oil prices is tied strictly to the economy, said Peter Beutel, an oil analyst and CEO of Cameron Hanover Inc. of New Canaan, Conn. Light sweet crude fell 93 cents to $38.98 on the New York Mercantile Exchange.

“Every time we get bad economic news, there’s a hard line drawn to the deepening recession, the loss of more jobs, less demand, and that translates into lower prices,” he told The Times.

There’s no limit to how low the price could go, Mr. Beutel said.

“If demand keeps dropping, it could go below $20” a barrel, he said.

Retail gasoline prices dropped to a national average of $1.653 a gallon as of Monday, the U.S. Energy Information Administration said.

If there was another bright light through the gloom, it appeared from a survey showing that consumer confidence rose this month because of declining prices.

The poll by Reuters/University of Michigan Surveys of Consumers said its final index reading of confidence for December increased to 60.1 from 55.3 in November.

“More consumers expected declines in prices than in any other survey since 1960 in December; 23 percent expected deflation in the year ahead, three times the level recorded just two months ago,” the survey said.

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