MW: Stocks falter on surprise drop in construction data
By Geoffrey Rogow & Donna Kardos Yesalavich, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell Wednesday as an unexpected decline in home construction and building permits in October hit consumer companies' shares.
The Dow Jones Industrial Average (INDU 10,377, -60.46, -0.58%) fell 72 points to 10,365, with Walt Disney & Co. (DIS 30.43, -0.44, -1.43%) shares off 1.3%. Going into Wednesday, the index has risen in nine of the past 10 sessions, closing at a new 2009 high on Tuesday.
The Standard & Poor's 500 (SPX 1,106, -4.04, -0.36%) dropped 6 points to 1,104, led by a drop consumer discretionaries, including Target & Co. (TGT 48.05, -0.72, -1.48%) and Starbucks Corp. (SBUX 21.72, -0.27, -1.23%) . The Nasdaq Composite (COMP 2,187, -16.73, -0.76%) dropped 17 points to 2,187.
Setting off the move lower, building permits in October fell 4% to a 552,000 annual rate. Economists had expected permits to rise by 0.9% to a rate of 580,000. Building permits are a sign of future construction, with a monthly declining hinting at a still weak consumer going into the holiday season. See story on housing starts.
With the decline in construction data, traders shrugged off a Labor Department report that showed U.S. consumer prices continued to rise at a moderate pace in October, indicating a slow economic recovery is keeping inflation contained. See story on consumer prices.
Given commodities prices have gained steadily in recent weeks, including a move higher to start Wednesday's session, the data wasn't able to stave off recent concerns about inflation. Notably, commodities are often bought by investors during periods of high inflation.
"This possible downturn in the (construction) numbers doesn't surprise me," said Andrew Neale, portfolio manager wealth-management at advisory firm Fogel Neale Partners.
"It's going to be very difficult to persuade homeowners to buy new homes when you've got such discounted existing inventory."
Oil futures rose 62 cents to $79.76 a barrel, as the dollar fell against both the euro and the yen. Read more on oil prices.
Also weighing against consumer companies, Salesforce.com (CRM 62.13, -3.48, -5.30%) lost 3.4% even after its third-quarter earnings matched Wall Street expectations and the company raised its full-year guidance. Read more on tech stocks.
Among other sectors, technology was also weak, hurt by Autodesk Inc.'s (ADSK 24.30, -2.70, -10.00%) 72% fiscal third-quarter profit decline. The design-software company recently fell 7.6% to $24.93. Read more on Autodesk results.
Merger activity was in the spotlight, with Hershey Co. (HSY 37.97, -0.44, -1.14%) in preliminary talks with Italian chocolate maker Ferrero S.p.A. about making a joint bid for U.K. confectioner Cadbury Plc (CBY 53.51, -0.49, -0.91%) (UK:CBRY 800.00, +12.00, +1.52%) , according to The Wall Street Journal, citing people familiar with the situation.
