Investors return to worried ways
The Dow Jones industrial average fell 280 points Tuesday as investors grew more uneasy about the economy and whether the Federal Reserve will take the steps needed to prevent credit market problems from spreading.
The minutes from the Fed's Aug. 7 meeting, released Tuesday, didn't discuss a cut in the benchmark federal funds rate that Wall Street has wanted.
And the New York-based Conference Board said its Consumer Confidence Index declined to 105.0 from a revised reading of 111.9 in July, a six-year high. While the biggest drop since 2005, the decline was slightly less than analysts expected.
The survey is closely watched because consumer spending represents two-thirds of the U.S. economy and confidence levels tend to influence spending.
A separate report released Tuesday said U.S. home prices fell 3.2 percent in the second quarter, the steepest decline since Standard & Poor's began its nationwide housing index in 1987.
MacroMarkets LLC chief economist Robert Shiller, an architect of that report, said the declining residential real estate market "shows no signs of slowing down."
In Illinois, however, a report Monday from the Illinois Association of Realtors showed the median home sale price made gains in the Chicago area in July even as sales fell.
The median home price for the area was $262,500, up 2.6 percent from July 2006. But home sales in the Chicago metropolitan area fell 13 percent to 9,725.
"Jobs remain the key driver for the housing market and Illinois' employment data has been positive in recent months," said Robert Zoretich, president of the Illinois Association of Realtors and broker-owner of Zoretich Realty Group in Chicago.
Financial services stocks were among the hardest hit Tuesday as investors reacted to not only economic reports that could affect the group, but a downgrade of several major players. Merrill Lynch analyst Guy Moszkowski cut ratings on Citigroup Inc., Lehman Brothers Holdings Inc., and Bear Stearns Cos. due to concerns about earnings.
Lehman Brothers Holdings Inc., the fourth-largest investment house, fell $3.47, or 6 percent, to $54.28. Bear Stearns, the fifth-largest investment bank, fell $3.78, or 3.4 percent, to $108.42. Citigroup Inc. fell $1.65, or 3.5 percent, to $46.14.