Stocks pull back on dismal housing news

NEW YORK - Stocks pulled back yesterday after news that sales of existing homes had slipped in July for a fifth straight month stirred concerns about the strength of the economy.

Sales of existing homes slowed to their most sluggish pace in nearly five years, while home prices fell for a record 12th straight month. The National Association of Realtors reported that existing-home sales slipped 0.2 percent in July to a seasonally adjusted annual rate of 5.75 million units. Inventories rose 5.1 percent to a record 4.59 million units.

The pullback perhaps was not unexpected given last week's rally and the fact that Wall Street is still trying to sort out concerns about failing mortgages and tighter access to credit for both individuals and corporations.

The Dow Jones industrial average fell 56.74, or 0.42 percent, to 13,322.13.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 12.58, or 0.85 percent, to 1,466.79, and the Nasdaq composite index fell 15.44, or 0.60 percent, to 2,561.25.

Investors saw fresh signals that there still seemed to be an appetite for corporate deal-making. U.S. Steel Corp. said it would buy Canada's Stelco Inc. for about $1.1 billion; the Swiss electrical engineer ABB Ltd. said it would sell its oil and gas production plant to Chicago Bridge & Iron Co. N.V. for $950 million; and Taiwanese computer vendor Acer Inc. said it would acquire U.S. computer-maker Gateway Inc. for $710 million.

But it is possible that the huge buyout sums seen earlier in the year, which drove the Dow to record highs last month, may slip as debt becomes more difficult to take on.

Gateway surged 61 cents, or 50 percent, to $1.82 after news that it was being acquired by Acer.

News of tie-ups among big companies seemed to offer little help to small-capitalization stocks. The Russell 2000 index of smaller companies fell 9.48, or 1.19 percent, to 789.45.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 88 cents to settle at $71.97 a barrel on the New York Mercantile Exchange.

In Asian trading, Japan's Nikkei stock average rose 0.32 percent, while China's Shanghai Composite Index, which hit record closes every day last week, gained 0.8 percent to another all-time high. In Europe, Germany's DAX index fell 0.28 percent and France's CAC-40 rose 0.38 percent. Markets in Britain were closed for a bank holiday.