NEW YORK (Thomson Financial) - Shares of homebuilders fell Wednesday,
reversing slight gains they made immediately after the Federal Reserve's 50
basis points rate cut amid continued worries over the U.S. housing market.
The iShares Dow Jones U.S. Home Construction ETF (ITB) dropped 2% to $19.54.
The ETF had risen to a session high of $20 about 15 minutes after the Fed's
interest-rate announcement and then plunged as much as 4.9%.
The S&P Homebuilders SPDR ETF (XHB) fell 1% to $21.29.
The Fed's policy setting committee cut the target for overnight rates to 3%
from 3.5% Wednesday as expected. In an accompanying statement, the Fed said
"downside risks to growth" remain and vowed to "act in a timely manner" to deal
with the risks.
The central bank also noted that recent information indicates "a deepening
of the housing contraction and that credit has tightened further for businesses
and households."
Among individual issues, shares of Centex fell 7.5% to $26.84, Ryland Group
Inc. dropped 4.1% to $30.99, and Champion Enterprises Inc. lost 3.4% to $9.79.
D.R. Horton Inc. fell 4.2% to $16.01 and NVR Inc. was down 2% at $615.
Wanfeng Zhou
wz/vj
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