Stock Prices Decline as Foreclosed Home Listings Grow
As reports of growing foreclosed home listings and declining retail sales were released, stocks fell on Wednesday by 2.2 percent.
The Dow Jones industrial average dropped by 184.22 points to 8,284.89.
Bond prices also rose as investors were discouraged by unmet expectations.
The Commerce Department reported that retail sales declined for the second consecutive month in April while RealtyTrac reported growths in foreclosed listings across the country.
Retailer Macy’s Inc. reported that it lost $88 million in the first quarter and its share price dropped by $11.52, a drop of 6.7 percent.
While the investors saw a record high average of 31 percent rise in the Dow Jones industrial average from its March lows, they have been bothered by the continued spikes in foreclosed home listings and falling retail sales. Even so, the Dow average is still higher by 26.5 percent compared to the Dow index on March 9.
Financial analysts said the stock decline could reach ten percent below the recent peak because actual economic measures failed to surpass expectations. As reported by RealtyTrac, foreclosed home listings continued to lengthen in many cities in April.
Nevertheless, Quincy Krosby, top investment strategist at The Hartford, chooses to be more optimistic. He explained that the stock market is just experiencing a pause and that it will pull back. He said it is better for the markets not to shoot up and then quickly drop in a free fall.
Also, there are only a few analysts who think that the stock market will fall below the lowest stock price levels in March.
Charlie Smith, top investment officer for Fort Pitt Capital, further explained that despite the decline, Wall Street operators have been able to eliminate end-of-the-world ideas in relation to stock markets.
While the Dow dropped by 2.2 percent, the S& P 500 Index fell to 883.92, a jump of 2.7 percent, and the Nasdaq composite dropped to 1,664.19, a drop of 3 percent.
The S&P 500 index is used by many as their indicator for the performance of professional investment firms and mutual funds. It returned to the negative column, which it has already surpassed on May 4.
In recent weeks, investors and many analysts have been buoyed by the two-month performance of the stock market and have been hoping that the economy is starting on its way to recovery. But the retail statistics and data on foreclosed home listings have again devastated market hopes.
