Wall Street posted its biggest loss since August 9 today, as the Dow Jones Industrial Average plunged 280 points, marking a drop of more than 2%, on relatively light volume. The Nasdaq was off 60.61, a 2.37% drop, and the S&P was down 34.43, or 2.35%.
A quartet of factors were responsible for the drop. First, the Conference Board's Consumer Confidence indices fell sharply. Second, the Standard & Poor's Case-Shiller Home Price index of major metro areas showed a 3.2% drop during the second quarter of 2007 versus the same period a year ago. The drop was the largest in the history of the index.
Third, the Federal Reserve released the minutes of the Federal Open Market Committee meeting early this month, and those minutes show a continuing recalcitrance toward dropping the overnight Federal Funds rate as the Fed continues to be fixated on inflation in spite of mounting evidence that the economy is flagging. Third, with many veteran traders away for the last week of the unoffical summer season, the market lacked buyers, which held trading volume to a relatively minimal 1.4 billion shares.
Home builder stocks again took it on the chin, with the S&P home builder index off 4.28% to $23.47. Beazer and Standard Pacific both fell through the $9 floor, joining WCI in the mid $8-per-share range. Orleans fell 3% to $6.80; Hovnanian 7.1% to $10.46; and Comstock, TOUSA and Dominion all floundering around in the low-to-mid $2 range.
