Stocks Are Off as Housing Takes a Breather: Toll Brothers Inc (TOL) and More

Stocks are broadly lower today as downbeat results from the housing sector weigh on homebuilders and equipment manufacturers. With roughly an hour left in the trading session, the Dow Jones Industrial Average is down by 37 points, or 0.26%.

Housing takes a breather
Data released by the Department of Commerce today suggested that the housing market took a breather in January. Housing starts fell by 8.5% compared to the revised December estimate — though, on a year-over-year basis, they grew by an impressive 23.6%.

Toll Brothers Inc (NYSE:TOL)These results are generally in line with a survey released yesterday reporting that sentiment among homebuilders has taken a turn for the worse. The National Association of Home Builders/Wells Fargo Housing Market Index fell to 46 this month from a reading of 47 in January — anything below 50 indicates a generally pessimistic view.

Also out today were earnings from Toll Brothers Inc (NYSE:TOL), the nation’s largest luxury-home builder. For the three months ended Dec. 31, net income at the company came in at $4.4 million, or $0.03 per share. Although this was an improvement over the same quarter in 2011, in which Toll Brothers earned $2.8 million, it came up short of estimates. Analysts surveyed by Bloomberg had expected EPS of $0.10 — more than three times the actual figure.

Toll Brothers CEO Douglas Yearley nevertheless struck an upbeat tone, saying that “demand has increased” and that it “appears that momentum is building.”

On the heels of this news, shares of homebuilders are broadly lower today. At the time of writing, Toll Brothers is down 5.9%, Lennar Corporation (NYSE:LEN) is off 4.3%, and PulteGroup, Inc. (NYSE:PHM) is lower by 4.5%.

In terms of Dow components, the best-performing stock on the blue-chip index is The Boeing Company (NYSE:BA). The aerospace company has struggled of late after is flagship 787 Dreamliner aircraft was grounded by aviation authorities around the world due to a series of battery fires. As my colleague Dan Caplinger observed this morning, shares in the company are rebounding following reports that the company “may have found a way to solve [these] problems.” Also working in Boeing’s favor, the company’s engineers have purportedly approved a new labor contract, improving the odds that it will avoid a labor strike.

Conversely, one of the worst-performing stocks on the Dow today is Caterpillar Inc. (NYSE:CAT). Given Caterpillar’s line of business — that is, mining and construction equipment — and the downbeat results from the housing sector, it’s unsurprising that its shares are trading lower. Near the end of the trading session, they’re off by 1.9%.

The article Stocks Are Off as Housing Takes a Breather originally appeared on and is written by John Maxfield.

John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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