New York – Wall Street rose Wednesday on some strong earnings and new deals, but not without a struggle, as mounting signs of a tougher lending climate again dogged investors.
The stock market, coming off Tuesday’s 226-point tumble in the Dow Jones industrial average, seesawed throughout Wednesday’s session. Ultimately, it drew confidence from better-than-expected quarterly profits at Web retailer Inc. and plane manufacturer Boeing Co., and acquisitions involving German engineering company Siemens AG and drugmaker Merck & Co.
Still, some investors worry that deteriorating lending conditions will cork this year’s heavy stream of dealmaking.
Buyouts usually involve taking on debt, and Wednesday the banks raising funds for the turnaround of Chrysler Group had to postpone a $12 billion debt offer after investors balked at the deal’s terms, according to people familiar with the situation who were not authorized to speak publicly.
Meanwhile, the National Association of Realtors confirmed that the housing market is far from recovery when it reported that sales of existing homes dropped 3.8 percent in June to the slowest rate in more than four years.
The figure was worse than analysts expected, and followed data from the Mortgage Bankers Association showing mortgage applications fell for the first time in four weeks to a five-month low.
Wall Street, at the peak of second-quarter earnings season, has been extremely volatile.
For seven straight sessions, the market has risen one day, fallen the next, then risen again.
Over that span, the Dow has lost 165.91 points, or 1.2 percent.
The market will likely remain rocky as investors try to assess whether problems related to home lending will hurt the broader economy.
Falling home prices have made it harder for some homeowners to refinance their homes, leading to more payment defaults and delinquencies. Home prices are likely to keep weakening, with values still unjustifiably high in many parts of the country, said Rob Lutts, chief investment officer at Cabot Money Management.
“Does that mean that the stock market becomes totally unhinged? I don’t think so. This is one factor,” Lutts said. Still, he said, the housing market downturn could easily cause a 5 percent to 10 percent correction on Wall Street.
The dollar rose against other major currencies.
Light, sweet crude for September delivery shot up $2.32 to $75.88 a barrel on the New York Mercantile Exchange, bouncing back from two straight days of steep declines after the U.S. government Wednesday said crude oil supplies fell last week.
