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Stock lower on worries over global economy; Home sales dip
NEW YORK (AP) ' Stocks are opening slightly lower as investors weigh the prospects of a global economic slowdown even as several U.S. companies report strong earnings.
Companies from a wide range of sectors' Nike, Oracle, FedEx, Tiffany and Discover Financial ' have reported stellar earnings this week. However, the strength comes tinged with worry for some of the companies that rely on sales in Asia and Europe, such as FedEx and Tiffany. Reports in China and Europe earlier in the week pointed to a likely slowdown in those economies.
Oil prices are continuing to march higher, which could hurt consumer spending and the U.S. real estate hasn't emerged out of its slump.
The Commerce Department said new-home sales fell 1.6 percent last month. Sales have fallen nearly 7 percent since December. Prices surged to their highest level in eight months, suggesting that builders anticipate more demand in the months ahead. The drop in home sales hurt stocks of home builders ' PulteGroup fell 7 percent, while Lennar fell over 3 percent.
The Dow Jones industrial average fell 27 points to 13,020 in the first half-hour of trading. The Standard & Poor's 500 index fell four to 1,388 and the Nasdaq composite fell 15 points to 3,047.
The dollar fell against the euro and the yen. Treasury prices and gold rose. The yield on the benchmark 10-year Treasury note fell to 2.22 percent. Markets were broadly lower in Europe. Germany's DAX fell 0.8 percent and France's CAC-40 fell 0.9 percent.
American consumers, who drive two-thirds of the economy, are spending more in stores and restaurants. But investors are worried about how long that will last if oil prices continue to rise.
Darden Restaurants, which operates Olive Garden and Red Lobster, beat Wall Street forecasts with a 8.5 percent increase in profits after warm weather brought more people to its restaurants. Athletic gear maker Nike also beat expectations. The company said its revenue rose in all regions, especially in North America and emerging markets. Despite the strong results, both stocks fell. Nike was off 2.5 percent, Darden 3.5 percent.
Crude oil rose 1.7 percent after a brief downturn Thursday. Gasoline has risen 59 cents per gallon since Jan. 1 and the average price nationwide is above $4 in at least eight states, plus the District of Columbia.
And then there is China and Europe. New surveys showed a contraction in the manufacturing sector in China, a bellwether for world demand as it produces and exports a huge amount of consumer goods, and one of the world's largest mining companies expects reduced demand there. In Europe, Ireland dipped back into recession.