IANS | 27 Jan, 2012
US stocks closed lower Thursday as disappointing housing sales offset the optimism from the Federal Reserve's decision to maintain low interest rate through 2014, Xinhua reported.

The Dow Jones industrial average lost 22.33 points, or 0.18 percent, at 12,734.63. The Standard & Poor's 500 was down 7.60 points, or 0.57 percent, to 1,318.45. The Nasdaq Composite Index dropped 13.03 points, or 0.46 percent, to 2,805.28.

Although the Fed decided to keep the ultra low interest rate to at least 2014, eliminating the expectations of any interest rate hike before that time, while the monetary authority set the inflation target to 2 percent, market optimism was short-live as US home sales dipped to record low in 2011.

The US Commerce Department said new home sales fell 2.2 percent to a seasonally adjusted annual rate of 307,000 in December. The data made home sales in 2011 the lowest in history, which surprised investors as they saw the housing indicator had been improving recently.

Another separate report by the authority said durable goods orders rose 3 percent in December, lifting by strong orders for airplanes and machinery. The data indicated that manufacturing activities are picking up.

However, the recovery of job market still worried investors. The US Labor Department said initial jobless claims rose sharply by 21,000 to 377,000 last week. The surprising hike in jobless claims suggested that recovery in US job market is not stable.

The mixed economic data raised doubts about the sustainability of US economic recovery and investors sought refuge to avoid risk. All sectors of S&P 500 index were in negative territory.

As regard to earnings, Caterpillar posted better-than-expected earnings with 58 percent jump in profit in the fourth quarter last year as the heavy equipment maker saw strong global demand for construction machinery.

Wireless provider AT&T's fourth quarter earnings missed expectations, but its revenue still beat estimates as subscribers increased.

Outside the US, political and business leaders continued to meet at the World Economic Forum in Davos. While Greece's private bondholders were set to meet and discuss whether to accept the deal of Greek debt write-down.

On other markets, the dollar continued to slip as the Fed's decision on Wednesday still weighed the greenback. Oil gained on weak dollar, but was still under $100 a barrel on demand concern. Gold rose more than 1 percent Thursday as risk-aversion appetite and weak dollar lifted the precious metal.