WALL STREET OUTLOOK Weaker amid ongoing credit woes, ahead of new home sales

WALL STREET OUTLOOK Weaker amid ongoing credit woes, ahead of new home sales

	Published : Fri, 24 Aug 2007 12:15 By : Agencies Print this Story

LONDON (Thomson Financial) - Wall Street is looking at a weaker opening today amid ongoing credit turmoil, with today's key new home sales data anticipated to show falls, further contributing to market unease about the state of the US housing market.

According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open about 29 points down at 13,206.

Yesterday, stocks ended a mildly erratic day a little lower, after anxiety about widening credit problems offset investor optimism about a 2 bln usd capital infusion into troubled mortgage lender Countrywide Financial Corp.

Adding to the growing feeling of concern is news that the fate of Home Depot's wholesale distribution business sale is up in the air.

The Atlanta-based retailer has hinted the deal could fall through. Or Home Depot may have to cut the price, which has already been lowered amid the current market situation.

And today's new home sales data is unlikely to make for comfortable reading, considering that the slump in the US housing market lies behind the current subprime mortgage market crisis.

New home sales are expected to fall again from the 834,000 annual rate reported in June. Thomson IFR Markets expects a 825,000 annual rate in July.

Drew Matus of Lehman Brothers said the drop in new home sales is continuing despite price concessions and other incentives from builders, and that difficulties in finding mortgage credit have priced some buyers out of the housing market altogether.

'This has contributed to dismal buyer sentiment, discouraging potential homeowners,' he said, adding that the large inventory of homes will be slow to correct.

In other economic news, economists expect another increase in July durable goods orders, although not as large as June's 1.3 pct. Thomson IFR Markets expects a 1.1 pct increase, although economists point out that future orders could fall.

'We anticipate some increased business caution in coming months amid turbulent and illiquid capital market conditions,' Peter Kretzmer of Bank of America said. 'As a result, equipment and software spending will likely grow modestly over the remainder of the year.'

In the energy pits, New York crude contracts for October delivery were down 15 cents at 69.68 usd per barrel.

Subprime woes have weighed on oil in recent weeks, with funds liquidating positions to cover losses elsewhere in their portfolios, and some analysts fear a possible slowdown in the wider economy could dampen demand for crude.

In corporate news, before the opening bell, AnnTaylor Stores, Burger King Holdings and HJ Heinz are all due to report their quarterly results.

Analysts polled by Thomson Financial expect women's clothing retailer AnnTaylor to report profit of 48 cents per share on revenue of 618.3 mln usd.

Burger King has not offered an outlook for the quarter, but analysts polled by Thomson Financial expect the fast-food chain to post earnings of 27 cents per share on revenue of 580.4 mln usd.

And finally, Heinz expects profit of 62 or 63 cents per share with sales climbing about 9 pct, implying revenue of about 2.25 bln usd.

Analysts polled by Thomson Financial expect earnings of 63 cents per share on revenue of 2.23 bln usd.

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