Stock prices were slightly lower Wednesday after the Commerce Department reported a bigger decline than expected in new home construction in October.
The Dow Jones Industrial Average fell for only the third time in November, down 11.11 points to 10,426.31. The Nasdaq composite index fell 10.64 points to 2,193.14 and the S&P 500 stock index slipped 0.52 points to 1,109.80.
Housing construction activity fell last month by 10.6 percent. And, building permit applications, a sign of future construction activity, also declined, falling by 4.0 percent in October.
Oil prices rallied Wednesday. Crude gained 44 cents to $79.58 a barrel after the Energy Department reported that oil inventories declined by 900,000 barrels in the past week.
The index has rallied as much as 64 percent from a 12-year low in March, pushing its valuation to about 22 times its companies’ reported earnings from continuing operations, the highest level since 2002, weekly data compiled by Bloomberg show.
Autodesk (Nasdaq: ADSK) slid 10 percent, the most in 10 months, to $24.20. The biggest maker of engineering-design software projected fourth-quarter profit excluding some items of 24 cents a share at most, trailing the average analyst estimate of 25 cents.
Salesforce.com (NYSE: CRM) lost 3.1 percent to $63.61. The largest seller of Internet-based customer-management software forecast fourth-quarter profit of 14 cents to 15 cents a share. Analysts, on average, expected the company to earn 15 cents, according to Bloomberg survey.
Bank of America (NYSE: BAC), the largest U.S. lender by assets, jumped 3.7 percent to $16.35 for the biggest gain in the Dow average. Paulson & Co., the hedge-fund firm run by billionaire John Paulson, said in a quarterly letter to investors that the shares may rise to $29.81 by December 2011.
“Banks will have passed the current writedown cycle and have visibility for growth in 2012,” the letter said. Bank of America dropped to $2.53 in February amid concern that the U.S. might seize lenders that ran short on capital. While Bank of America’s stock “has risen from when we purchased the stock, we believe considerable upside remains,” the letter said.
Bank of America helped lead financial shares in the S&P 500 to the biggest of three gains among its 10 industry groups. Health care and telephone shares posted the other advances.
Pall Corp. (NYSE: PLL) lost 3 percent to $33.59. The maker of filters for refineries and drugmakers reported first-quarter sales of $546.9 million, missing the average estimate of analysts surveyed by Bloomberg of $573.8 million.
Western Digital Corp. (NYSE:WDC) dropped 1.6 percent to $38.45. The second-largest maker of hard-disk drives was cut to “Underperform” from “Buy” and had its share price estimate lowered to $35 from $44 at Bank of America, which said the “easy money” in cyclical hard-disk-drive stocks has been made.
Tobias Levkovich, the chief U.S. equity strategist at Citigroup Inc. (NYSE: C), increased his 2009 and 2010 year-end estimates for the S&P 500 to 1,100 and 1,150, respectively, based on improving corporate profits and low interest rates.
Strategists at Wall Street’s biggest securities firms haven’t been able to keep up with the S&P 500 after the steepest surge since the 1930s. The benchmark gauge for U.S. equities ended Tuesday at 1,110.32, or 5.2 percent above the average 2009 estimate from the 10 forecasts compiled by Bloomberg.
Levkovich’s new estimates imply the S&P 500 will be little changed between now and the end of the year and advance 3.6 percent from Tuesday’s close to the end of 2010.
“I’m only looking for the equity market to consolidate and flatten out for the next three to six months,” said Thomas Nyheim, a money manager at Christiana Bank & Trust Co. in Greeneville, Del., which manages $4.7 billion.
Pulte Homes Inc. (NYSE” PHM) added 4.6 percent to $10.04. The homebuilder that bought competitor Centex Corp. in August was raised to “Buy” from “Hold” and its share price estimate increased to $12 from $11 at Citigroup Inc., which said the company was “undeservedly out of favor.”
Pulte led a gauge of homebuilders higher even after Commerce Department figures showed housing starts unexpectedly plunged 11 percent in October as the sales outlook dimmed with the looming expiration of a government tax credit. The index of 12 builders in S&P indexes climbed 0.7 percent.
Colgate-Palmolive (NYSE: CL) surged 3.7 percent to $85.87. The Daily Telegraph reported that Reckitt Benckiser Group Plc is close to a “multibillion pound cross-border transaction” and “well-placed sources” think the most obvious candidate is Colgate-Palmolive.
E*Trade Financial Corp. (Nasdaq: ETFC) rallied 9 percent to $1.69. TD Ameritrade Holding Corp.’s chief executive officer said buying an online brokerage is the best use of the company’s cash and that he would consider a deal with E*Trade at the right price, according to Reuters.
Advanced Micro Devices Inc. (NYSE: AMD) had the steepest gain in the S&P 500, climbing 11 percent to $7.32. The second-largest maker of personal-computer processors said it will offer $500 million in senior notes. AMD intends to use the proceeds, along with existing cash, to purchase its 5.75 percent convertible senior notes due 2012.
Bloomberg News contributed to this report.
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