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US open: Economic data depresses equities

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Date: Tuesday 29 Apr 2008

LONDON (ShareCast) - US stocks open only modestly lower, despite unwelcome economic news which shows the decline in US house prices accelerating and consumer confidence dipping further.

Further evidence of the perilous state of the US housing market came today as the S&P/Case-Shiller home price index showed its biggest ever year-on-year decline.

The index, which measures house prices in 20 US metropolitan areas, fell 12.7% in February from a year earlier. In February alone prices fell 2.6%.

Meanwhile, the Conference Board’s confidence index fell to 62.3, its lowest level since March 2004, down from 65.9 in March. However, the fall was not as bad as economists had been predicting.

The Dow Jones is trading 41 points lower at 12,830 and the S&P 500 is 6 points easier at 1,389. The NASDAQ Composite is down 8 at 2,416.

Drugmaker Merck leads the market lower. The company said late Monday that the US Food and Drug Administration needs more information on its cholesterol drug candidate Cordaptive.

Mining stocks are out of favour, as the dollar’s rally drives down the price of gold and copper. Freeport-McMoRan leads the sector’s retreat.

Builder DR Horton falls on the gloomy housing data while Masco, which makes taps and paints, is also a victim of the housing slump, Masco’s profits virtually evaporated in the first quarter falling to $2m from $143m a year earlier.

On the bright side, glassmaker Corning is on the up after demand for televisions helped first quarter earnings per share come in 2 cents above analysts’ expectations at 44 cents.

Office Depot was another to produce results that pleasantly surprised the market. Although the stationer’s first quarter earnings per share fell to 29 cents, this still beat the market consensus of 22 cents.