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Stocks fall on new-homes sales slump

The stock market closed with a slight loss Wednesday after sales of new homes hit a record low and the Federal Reserve indicated that problems in Europe pose a threat to the U.S. economy.

The Dow Jones industrial average rose about 5 points, but broader indexes fell and losing stocks outnumbered advancers on the New York Stock Exchange. Treasury prices rose, pushing down interest rates. The yield on the benchmark 10-year Treasury note fell to its lowest level in more than a year.

Stocks fell early in the day after the government said new home sales dropped by a third to a record low last month. On Tuesday an unexpected slide in sales of existing homes also hurt stocks. Existing homes make up a far bigger part of the market than new homes.

"I think the market is, thankfully, already getting used to the idea that housing is going to fall off a cliff between the end of the homebuyer tax credit and now," said John Canally, economist at LPL Financial. The credit expired April 30, and its absence is expected to be felt beyond May sales figures.

The Fed's statement saying "financial conditions have become less supportive of economic growth" and citing "developments abroad" also gave traders pause.

The market was subdued and trading volume was light, as it has been for weeks. Traders watched World Cup soccer matches in the morning.

The Dow gained 4.92 points, or 0.1 percent, to close at 10,298.44 after being up nearly 75 points in afternoon trading. The index lost 149 points Tuesday after the home sales report. The Standard & Poor's 500 index fell 3.27, or 0.3 percent, to 1,092.04, and the Nasdaq composite index fell 7.57, or 0.3 percent, to 2,254.23.- AP

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