Stocks drop as Obama speech and housing data weigh

Ellis Mnyandu
Reuters
Wednesday February 25th, 2009

Stocks fell on Wednesday as investors found little new in a major speech by President Barack Obama on how he planned to stabilize the economy, while gloomy home sales data weighed on the market.

Long-standing worries about recession and the fate of the banking sector persisted despite Obama’s speech to Congress on Tuesday night, sending shares of financial services companies, big manufacturers and energy companies lower.

“The market was up 4 percent yesterday and I think that was probably a little excessive given the economic backdrop,” said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

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“There was a little bit of an overshoot to the upside yesterday and we’re just giving some of that back early as President Obama didn’t have anything substantive to say last night.”

Data pointing to more weakness in the U.S. housing market added to the negative tone.

• A d v e r t i s e m e n t

The pace of sales of existing home fell in January to a 4.49 million-unit annual rate while home prices and inventories dropped, the National Association of Realtors reported.

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