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Stocks Fall with Release of Dallas Fed and New Home Sales Reports

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Economic reports

October 26 saw the release of two important US economic indicators, namely, the results of the Dallas Fed manufacturing survey and the new home sales report.

According to the Dallas Fed manufacturing survey, the general activity index for the month of October 2015 declined to -12.7, against the consensus of -6. This steep decline in the activity index implies contraction in the factory sector, resulting in the fall of the materials and industrial sectors on the day. Prominent among these stocks were Allegheny Technologies (ATI), Alcoa (AA), and Newmont Mining Corporation (NEM). These stocks fell by 5.8%, 4.0%, and 3.8%, respectively, on Monday, October 26.

The graph above shows the performance of Allegheny Technologies (ATI), which is a materials stock, and Joy Global (JOY), industrial stock, for the month of October 2015.

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New home sales

The new home sales report, which measures the number of newly constructed homes, indicates trends in the housing market, economic momentum, and purchases of furniture and appliances. According to this report, the number of new sales fell to an annual rate of 468,000 in September 2015, well below the consensus of 549,000. This report had an adverse impact on the real estate sector as well as on stocks belonging to the housing sector. Homebuilding industry players Lennar Corporation (LEN), D.R. Horton (DHI), and PulteGroup (PHM) saw their stocks fall by 0.9%, 0.7%, and 0.9%, respectively, on October 26.

Healthcare

Investors who had become skittish about healthcare stocks over allegations of Valeant Pharmaceuticals International’s (VRX) accounting malpractices and claims of false revenues seemed warmer towards biotechnology stocks. However, Valeant is yet to be fully free of the controversy, trading at a loss of 5.3% on Monday, October 26. Let’s now take a look at the SPDR S&P 500 ETF’s (SPY) key stocks that day.

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