Housing data jangle nerves on Wall Street

Stocks edged lower Monday after three days of solid gains as a gauge of confidence in the home-building industry dropped to a 16-year low, deepening concern about the housing slump.

The deteriorating housing industry, combined with a six-week advance in bond yields, prompted concern that higher borrowing costs would restrain consumers and businesses.

“Stocks are still nervous about what higher interest rates mean to the economy and the market,” said Rick Campagna, who helps manage $3.5 billion at Provident Investment Counsel in Pasadena. “The market’s worried about every little move.”

The reaction ended a sharp rally late last week, when tame inflation data pushed the Dow Jones industrial average to its biggest three-day point gain since November 2004.

The Dow on Monday fell 26.50 points, or 0.2%, to 13,612.98. The Standard & Poor’s 500 index fell 1.86 points, or 0.1%, to 1,531.05, and the Nasdaq composite index fell 0.11 of a point to 2,626.60.

The Russell 2,000 index of smaller companies fell 1.91 points, or 0.2%, to 846.28.

Declining issues narrowly led advancers on the New York Stock Exchange.

A gauge of 16 home builders in S&P; indexes slid 1.1% after an index of builder sentiment put out by the National Assn. of Home Builders dropped to 28 from 30 in May. Analysts had expected no change. Any rating under 50 indicates more negative responses than positive ones.

Home builders Lennar, Centex and Beazer Homes USA slipped to their lowest levels since April.

Lennar, the largest U.S. builder by revenue, fell 57 cents, or 1.4%, to $41.19. Centex dropped 66 cents, or 1.5%, to $43.13. Beazer slumped 95 cents, or 3%, to $30.83.

Westwood-based KB Home fell 27 cents, or 0.6%, to $43.40.

Aside from recent housing market snapshots, most economic data have been coming in strong, and last week’s inflation gauges showed milder-than-anticipated increases in costs once food and energy prices were stripped out.

“To me, it’s amazing there’s still people looking for what’s wrong with a good economy,” said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis, calling the recent rise in Treasury yields a result of economic data that were better than expected. “It’s kind of an abrupt change, but all in all, in reality, interest rates are relatively low by historic standards.”

Treasury yields surged early Monday before ending the day lower. The yield on the benchmark 10-year Treasury note traded as high as 5.18%, then dropped to finish at 5.14%, down from 5.16% on Friday.

Oil prices continued their march upward. Crude futures settled at $69.09, up $1.09, in New York. Energy prices have rallied in recent weeks on speculation that refiners might not have enough supply to meet summer demand.

The dollar was mixed against other major currencies, and gold prices rose.

In other market highlights:

* An index of transportation stocks in the S&P; 500 dropped 1%. FedEx, the world’s largest air-cargo carrier, fell $1.45, or 1.3%, to $109.92. C.H. Robinson Worldwide, the No. 1 U.S. arranger of freight shipments, fell $1.43, or 2.6%, to $53.33.

* Yahoo said after the bell that co-founder Jerry Yang would replace Terry Semel as chief executive in the Web giant’s latest bid to regain investor confidence. Semel is to become nonexecutive chairman. Yahoo rose 81 cents, or 3%, to close at $28.12 in regular trading, then added $1.33, or 4.7%, to $29.45 in after-hours trading.

* Wendy’s International slid $1.47 to $38.26. The third-largest hamburger chain, which put itself up for sale in April, reduced its profit forecast for the year, raising speculation that the company might have trouble finding a buyer.

* Symantec climbed 47 cents, or 2.4%, to $20.17 after Goldman Sachs upgraded the stock to “buy” from “neutral.”

* Apple added $4.59, or 3.8%, to $125.09. The company said the battery on the iPhone would last longer than expected when the handset was unveiled in January.

* Lexicon Pharmaceuticals jumped 24 cents, or 7.8%, to $3.32. The biotech firm agreed to a deal under which the New York investment firm Invus Group would boost its holding to 40%.

* Genesco gained $4.15, or 8.4%, to $53.75. The owner of the Johnston & Murphy and Journeys shoe chains agreed to be bought by Finish Line for $54.50 a share, or $1.5 billion, in cash.

* Overseas, key stock indexes rose 1% in Japan, 2.7% in Hong Kong, 2.9% in Shanghai and 0.1% in Germany. Indexes fell 0.4% in Britain and 0.3% in France.