Bleak housing outlook beats up Dow

By MADLEN READ, Associated Press
Posted Wednesday, October 17, 2007Read Comments-->10/17/2007 -->
NEW YORK -- Wall Street sank for a second straight session Tuesday after Federal Reserve Chairman Ben Bernanke said the slumping housing market remains a "significant drag" on the economy.
Bernanke's speech Monday night in New York elevated concerns that the summer's credit tightness might persist into the winter -- a sobering thought for investors, who are sifting through mixed third-quarter earnings and watching energy costs rise.
"First of all, the worry is we're getting more bad news on housing. No. 2 is higher oil prices. That's a pretty bad combination," said Hugh Johnson, chief investment officer of Johnson Illington Advisors.
Crude oil prices spiked to another record above $88, and a National Association of Home Builders' index that tracks developers' expectations of future home sales fell for the eighth consecutive month to the lowest point since January 1985. Also Tuesday, Treasury Secretary Henry Paulson echoed Bernanke's concerns, saying housing is a significant risk to the economy.
The uncertainty on Wall Street about the economic outlook "comes at a time when earnings results are not particularly exciting -- in fact, are dismal," Johnson said.
The Dow Jones industrial average fell 71.86, or 0.51 percent, to 13,912.94, after falling more than 100 points earlier in the session.
Broader indicators also declined. The Standard & Poor's 500 index slid 10.18, or 0.66 percent, to 1,538.53, and the Nasdaq composite index dipped 16.14, or 0.58 percent, to 2,763.91.
The technology-dominated Nasdaq could get a boost, though, today: Intel Corp. and Yahoo Inc. posted better-than-expected third-quarter results after the bell Tuesday, and their stocks gained sharply in after-market trading.
Crude futures rose $1.48 to a record close of $87.61 a barrel on the New York Mercantile Exchange, after briefly surpassing $88.