Largest drop in two months as Wall St rally loses steam

A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City on Dec 28, 2016.
A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City on Dec 28, 2016. PHOTO: REUTERS

NEW YORK (REUTERS) - US stocks fell in low volume on Wednesday (Dec 28) in a broad decline triggered in part by a sharp drop in home resales.

Contracts to buy previously-owned US homes fell in November to their lowest level in nearly a year, a sign that rising interest rates could be weighing on the housing market.

The PHLX housing sector index fell 1.2 per cent to close at its lowest in three weeks. The S&P 500 posted its largest daily decline since Oct 11.

Technology was the largest weight on major indexes, however, with Nvidia down 6.9 percent to $109.25 after short seller Citron Research said the market was overlooking the headwinds for the stock - which had earlier touched a record high.

The S&P 500 tech sector fell 0.9 percent after closing on Tuesday at its highest closing level since the year 2000.

"There was enough bad news during the day" to pull the market lower, said Keith Bliss, senior vice-president at Cuttone & Co in New York referring to the housing data.

He said US Secretary of State John Kerry's comments that Israel's building of settlements on occupied land was endangering Middle East peace, made some traders nervous and exacerbated the decline with two allies publicly at odds.

The Dow Jones Industrial Average fell 111.36 points, or 0.56 percent, to 19,833.68, the S&P 500 lost 18.96 points, or 0.84 percent, to 2,249.92 and the Nasdaq Composite dropped 48.89 points, or 0.89 percent, to 5,438.56.

About 4.82 billion shares changed hands in US exchanges, below the 7.2 billion daily average over the last 20 sessions. Average daily volume this week last year was 5 billion.

Boeing fell 0.9 percent to US$156.10 a day after Delta Air Lines said it had reached an agreement with the planemaker to cancel a US$4-billion order for 18 Dreamliner aircraft.

Declining issues outnumbered advancing ones on the NYSE by a 2.73-to-1 ratio; on Nasdaq, a 2.72-to-1 ratio favored decliners.

The S&P 500 posted 11 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 98 new highs and 46 new lows.