Summary: A late-day sell-off erased gains sparked by solid consumer and housing data with traders giving Iraq concerns as a possible reason; Vertex jumps 40 percent on trial results; Micron boosts chip stocks. Conway G. Gittens reports.
Wall Street sold off late in the day - and traders are confused as to why. Some blame the drop on end-of-the-quarter profit-taking, others on growing concerns about Iraq, others say it's easy to swing the market with volumes so light. Whatever the excuse, Blue chips suffering their worst day in a month, with the rest of the market down as well. Economic news should have made this an up day. Consumer confidence rose to its highest in almost 6-1/2 years with Americans more confident in the labor market. Meanwhile, the pace of new home sales hit a six-year high last month, thanks to the biggest one-month surge in home buying since January 1992. Another report on housing shows the cost of buying a home is slowing slightly. Home prices in 20 metropolitan cities rose only two-tenths of one percent in April and up just under 11 percent compared to the year before. That's the smallest price gain in more than a year. A rapid rise in home prices, one of the reasons blamed for a soft start to the traditionally busy spring buying season. Federal Reserve voting member Charles Plosser says the economy is improving enough for fellow policymakers to start thinking of a policy change. SOUNDBITE: CHARLES PLOSSER, PRESIDENT, PHILADELPHIA FEDERAL RESERVE (ENGLISH) SAYING: "The current data suggests that economic strength is fairly broad based as evidenced by recent economic indicators, the optimism expressed by many firms and their CEOs- both in the manufacturing and service sectors. As for inflation, recent readings have moved up a bit, mitigating at least somewhat, concerns that low inflation will persist and decline further." Shares of Micron surging to their highest in 12-years one day after the maker of chips used in personal computers beat forecasts. Intel climbing to highs not seen in just over a decade. It recently boosted guidance due to stronger-than-expected PC demand. Groupon snapped up Canadian start up SnapSaves in a bid to fight the competition Coupons.com. Shares of Groupon closing at a seven-week high on the news. But the stock of the day by far - Vertex - surging more than 40 percent in one day- after successful results in two late-stage drug trials. Looking overseas, Business sentiment in economic powerhouse Germany fell to its lowest of the year. But stocks in Germany and France crept higher. Not so in the U.K.