July 24, 2008
NEW YORK (AP) — Wall Street abruptly ended an earnings-driven rally and closed sharply lower Thursday after a steeper-than-expected decline in existing home sales and worries about the financial sector chilled the market’s recent optimism. The major indexes fell about 2 percent, including the Dow Jones industrial average, which lost more than 280 points.
The National Association of Realtors said sales resumed their decline in June after a slight rebound in May. Existing home sales declined by 2.6 percent in June, well beyond the 1 percent drop economists had forecast.
Investors punished shares of homebuilders and financial companies Thursday because both sectors have struggled with the declining housing market.
Alan Lancz, director at investment research group LanczGlobal, said investors are concluding that while financials had been oversold in recent weeks and were due for a rebound, problems remain with tight credit and souring mortgage debt.
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