Wall St slips on housing data, euro-zone concerns (Reuters)

November 30, 2010

NEW YORK (Reuters) – Wall Street declined on Tuesday as the latest data on home prices in the United States underlined the obstacles on the economy’s road to recovery and added to lingering worries about the euro-zone debt crisis.

Reflecting investors’ mounting uncertainty, the CBOE Volatility Index VIX (.VIX) jumped 5.8 percent to 22.78.

Stocks opened lower and remained under pressure as the euro sank to a 10-week low against the U.S. dollar, after a weekend rescue package for Ireland did little to stem fiscal concerns. The euro and stocks have been trading in sync with each other in recent weeks as European debt problems resurfaced, driving investors away from risky assets.

In the United States, the latest S&P/Case-Shiller home prices data disappointed investors, as monthly prices fell more than expected in September, and prices from a year earlier rose more slowly than forecast.

The Dow Jones U.S. home construction index (.DJUSHB) edged up 0.2 percent after closing Monday at its lowest since July 2009.

“The European crisis will continue to weaken stocks, at least until the end of the year, since this is something that we can’t just put away and will not quiet down soon,” said Jerome Hepplemann, portfolio manager at Old Mutual Focused Fund in Berwyn, Pennsylvania.

The Dow Jones industrial average (.DJI) fell 39.17 points, or 0.35 percent, to 11,013.32. The Standard & Poor’s 500 Index (.SPX) shed 5.94 points, or 0.50 percent, to 1,181.82. The Nasdaq Composite Index (.IXIC) slipped 24.87 points, or 0.99 percent, to 2,500.34.

By midday, all three major U.S. stock indexes had regained a modest amount of ground to come off their intraday lows.

Google Inc (GOOG.O) weighed on the tech-heavy Nasdaq index following media reports that the company is close to a deal to buy local advertising website Groupon Inc in what could be the Internet giant’s biggest acquisition to date.

Google shares fell 3.2 percent to $563.54.

On the upside, Swiss engineering group ABB (ABBN.VX) is to buy U.S. industrial motors manufacturer Baldor Electric Co (BEZ.N) for $3.1 billion to capitalize on a global push for energy efficiency and boost its North American presence. Baldor’s stock soared 40.2 percent to $63.23 and topped the list of percentage gainers on the New York Stock Exchange.

In November, U.S. consumer confidence rose to its highest level in five months, helped by improving labor market conditions, according to a report from the Conference Board, a private-sector research group.

Global investors increased their exposure to equities in November despite weaknesses on many bourses, while U.S. and British fund managers stepped away from crisis-hit euro-zone bonds, a Reuters asset allocation poll found.

(Reporting by Angela Moon; Editing by Jan Paschal)

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