- U.S. stocks declined before a home- sales report today that may show the worst housing recession in 16 years remains a drag on the economy.
Caterpillar Inc. and General Electric Co., whose earnings are sensitive to the pace of economic growth, dropped. Exxon Mobil Corp., the world's biggest oil producer, led energy shares lower as crude prices retreated.
The Standard & Poor's 500 Index lost 4.95 or 0.3 percent, to 1,474.42 as of 9:44 a.m. in New York. The Dow Jones Industrial Average slipped 42.59, or 0.3 percent, to 13,336.28. The Nasdaq Composite Index fell 3.83, or 0.2 percent, to 2,572.86.
The S&P 500 has dropped 5.1 percent from a July 19 record amid concern lower house prices and more mortgage defaults will slow the world's largest economy. The National Association of Realtors may report today that U.S. sales of previously owned homes fell in July for a fifth consecutive month.
``Investors still have to gauge the effects of the credit crunch on the economy,'' said Patrizio Pazzaglia, who helps manage the equivalent of $400 million at Bank Insinger de Beaufort NV in Rome. ``A slowdown is a likely scenario and it's not reflected in earnings estimates, so it's sensible to be cautious in the medium term.''
U.S. stocks rose on Aug. 24 after reports showed better- than-forecast sales of new homes and durable goods orders.
GE, the world's second-biggest company by market value, slid 26 cents to $39.15 today. Caterpillar, the largest maker of earth-moving equipment, declined 57 cents to $75.75.
Energy Shares
Energy shares in the S&P 500 dropped 0.6 percent as a group after prices for crude oil, natural gas and gasoline fell in New York. Exxon declined 52 cents to $85.17. ConocoPhillips, the third-largest U.S. producer, lost 30 cents to $80.44.
Sales of previously owned homes probably decreased 0.9 percent to an annual rate of 5.7 million last month from a revised rate of 5.75 million the prior month, according to the median forecast of economists in a Bloomberg survey. That would be the slowest pace since October 2002.
The Federal Reserve this month acknowledged a growing risk to economic growth in the wake of subprime mortgage defaults, when it unexpectedly lowered the interest rate it charges banks.
U.S. Steel Corp., the biggest U.S.-based steelmaker, increased 12 cents to $93.51 after it agreed to acquire Stelco Inc. for $1.1 billion, buying the last Canadian-owned mill. Stelco shareholders will receive C$38.50 ($36.62) a share, the companies said in a statement. That's 43 percent more than Stelco's closing price of C$26.93 in Toronto trading on Aug. 24.
Home Depot
Home Depot Inc. gained 63 cents to $35.31. The world's biggest home-improvement retailer agreed to sell its construction-supply unit for $8.5 billion, cutting the price by 18 percent as the U.S. credit squeeze curbed demand for leveraged-buyout debt, three people familiar with the agreement said.
Bain Capital LLC, Carlyle Group and Clayton Dubilier & Rice negotiated a reduction from the $10.3 billion Home Depot sought two months ago after the firms' lenders demanded more favorable terms, said the people, who declined to be identified because the final accord hadn't been signed. Atlanta-based Home Depot agreed to finance $1 billion of the purchase, they said.
Home Depot spokeswoman Paula Drake declined to comment on yesterday's agreement. Representatives of the private-equity firms and banks wouldn't comment publicly or didn't return calls seeking comment.
Sun-Times Media Group Inc. added 3 cents to $2.99. National Bank of Canada's Ironstone Trust failed to honor $25 million that came due Aug. 21 and $3 million on Aug. 24, Sun-Times said. Coventree Capital's Planet Trust didn't redeem $20 million. As of Aug. 16, Sun-Times said it had $121 million invested in asset- backed commercial paper in Canada. Sun-Times said today it doesn't expect a ``major capital loss.''
Gateway Surges
Gateway Inc. surged 59 cents to $1.80. Acer Inc., the world's fourth-largest computer supplier, said it will pay $710 million to acquire Gateway to expand global sales. Acer will pay $1.90 a share for Gateway, according to a statement today from the Taipei-based company. The price represents a 57 percent premium over Gateway's closing price of $1.21 on Aug. 24.
Comcast Corp. gained 32 cents to $25.80. Shares of the largest U.S. cable-television company are undervalued and may climb to $40 in the next 12 months, Barron's said, citing Craig Moffett, a Sanford C. Bernstein & Co. analyst.
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