Stocks fell Tuesday as worries mounted that the nation's housing market may be slowing sharply enough to seep into the broader U.S. economy and crimp consumer spending.
A housing index released Tuesday by Standard & Poor's showed that prices of single-family homes across the nation fell in January compared to a year ago, the worst results in more than 13 years.
Also causing concern among investors, Lennar Corp., one of the largest U.S. homebuilders, said its first-quarter profit tumbled 73 percent on continued softness in the housing market, and warned it doesn't expect to meet its 2007 earnings guidance.
The market has been nervous lately that a drop in housing values will further weaken the already-sinking subprime mortgage market, as well as cause consumers to feel less wealthy and rein in their spending. Consumers account for about two-thirds of economic activity.
A reading of March consumer confidence from the Conference Board fell to 107.2, the lowest level since November. Wall Street was expecting the index to slip by a smaller amount. The index was at 112.5 a month earlier, which had been its highest level in five-and-a-half years.
In midmorning trading, the Dow Jones industrial average fell 58.72, or 0.47 percent, to 12,410.35. That puts the index into negative territory for the year.
Broader stock indicators were also lower. The Standard & Poor's 500 index lost 7.33, or 0.51 percent, to 1,430.17, and the Nasdaq composite index declined 11.96, or 0.49 percent, to 2,443.67.
Bonds slipped, with the yield on the benchmark 10-year Treasury note rising to 4.62 percent from 4.61 percent late Monday. The dollar was lower against the euro and yen, while gold prices edged higher.
Crude oil prices fell 42 cents to $62.44 a barrel on the New York Mercantile Exchange. Gasoline prices have risen sharply in recent weeks, giving many Americans another reason to keep a tight budget.
Also Tuesday, the Richmond Federal Reserve is expected to weigh in with reports on its region's manufacturing.
Lennar Corp. fell $1.42, or 3.2 percent, to $43.12 in early trading, after reporting that ongoing softness in the housing market will keep eating into profits.
Other homebuilder stocks also tumbled on Lennar Corp.'s outlook and the S&P's home price data; Toll Brothers, D.R. Horton Inc., Centex Corp., Pulte Homes and KB Home all fell more than 2 percent.
In other corporate news, Electronic Clearing House Inc. plunged on news that it agreed to cancel its $142 million buyout by financial software maker Intuit Inc.
Shares of Electronic Clearing House Inc., which provides electronic payment services, lost $6.81, or 36.6 percent, to $11.80, from their close at $18.61 on the Nasdaq. Intuit shares gave up 22 cents to $27.15, from a $27.37 finish on the Nasdaq.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 200.9 million shares.
The Russell 2000 index of smaller companies was down 5.39, or 0.67 percent, at 803.55.
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