Stocks Lower On Disappointing Economic News

September 27, 2005
Ashton Dorkins

After a positive start, stocks have
edged lower during the morning session. Disappointing economic news
in the form of consumer confidence data and a larger-than-expected drop in
monthly new home sales pushed stocks slightly lower.

The Conference Board revealed that its consumer confidence
index dropped sharply in September to 86.6, its lowest level since October of
2003. The reading is down from August’s level of 105.5 and below the projection
of most economists. The Conference Board’s expectations index also fell sharply,
dropping to 71.7 for September from 93.3 in August.

The Commerce Department reported that new home sales declined
9.9% in August to a seasonally adjusted annual rate of 1.237 million units.
July’s rate was revised down to 1.373 million units from the 1.410 million units
that was originally reported. Economists had expected a rate of 1.363 million
units.

The housing sector has dropped off on the disappointing new
home sales, though its loss is less than 1%. Gold stocks remain weak as well.
The HMO sector remains the most notable mover to the upside. WellChoice
(
WC |
Quote |
Chart |
News |
PowerRating)
and WellPoint
(
WLP |
Quote |
Chart |
News |
PowerRating) confirmed that they have reached a merger deal.
Under the agreement, each WellChoice share will be exchanged for $38.25 in cash
and 0.5191 of a share of WellPoint stock. The companies reported that the deal
is expected to be neutral to WellPoint’s 2006 EPS and accretive after that. The
companies said the transaction would likely close in the first quarter of 2006.

Another merger deal is giving Party City
(
PCTY |
Quote |
Chart |
News |
PowerRating)
one of the morning’s largest percentage advances. The stock is currently up
$4.60, or 38%, on a deal to be purchased by Berkshire Partners And Weston
Presidio for $360 million.

Zoran
(
ZRAN |
Quote |
Chart |
News |
PowerRating) is among the most notable movers to
the downside in the early going on an analyst downgrade. The stock is currently
posting a decline of $1.40, or 9%.

Boeing
(
BA |
Quote |
Chart |
News |
PowerRating) was among the best performing blue chips on Monday after
it revealed a labor deal that, if approved by union members, would end a
weeks-old machinists strike. The stock is again a strong gainer early in
Tuesday’s session, though it is still off Monday’s intraday peak. Boeing, which
is higher by 1.4%, is the only Dow component rising more than 1%.

Risers And Fallers

S&P 500:

Nasdaq 100:

Strongest Sectors

Weakest Sectors

Dow	-12.98	10,430.65
Nasdaq	-5.13	2116.33
S&P 500	-3.01	1212.62
	NYSE	Nasdaq
Volume	778,267,000	660,809,000
Up Volume	204	271
Down Volume	485	327
Advances	1059	984
Declines	2057	1818
New Hi’s	62	53
New Lo’s	70	33

Ashton Dorkins

ashtond@tradingmarkets.com

Stocks Lower On Disappointing Economic News

BUY THE FEAR, SELL THE GREED

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