Wall Street sags on bleak housing view

NEW YORK (Reuters) - Stocks slipped on Wednesday following a negative assessment of the housing market from a large home builder and a Federal Reserve report indicated some U.S. regions were seeing slowing economic growth.

Stocks gave up gains in the last hour of trading after the chief executive of D.R. Horton Inc. (DHI.N) delivered an unusually blunt evaluation of the residential real estate market.

Energy stocks, including Exxon Mobil Corp. (XOM.N), rose after a jump in crude oil prices, and investors snapped up some beaten-down shares of mortgage lenders, including Fremont General Corp. FMT.N, on a report that it has several suitors interested in its mortgage unit.

"What you get here is the economy is weak," said Joseph Battipaglia, chief investment officer for Ryan Beck & Co. in Philadelphia. "I just think this erosion of profitability in an economy that's weaker than expected, alongside a Fed that's basically going to sit on the sidelines, means that stock prices need to come in further."

The Dow Jones industrial average .DJI declined 15.14 points, or 0.12 percent, to end at 12,192.45. The Standard & Poor's 500 Index .SPX shed 3.44 points, or 0.25 percent, to finish at 1,391.97. The Nasdaq Composite Index .IXIC dropped 10.50 points, or 0.44 percent, to close at 2,374.64.

A BUILDER'S UNVARNISHED VIEW

Economic concerns were at the top of Wall Street's worry list ahead of Friday's February jobs reports, which investors will use to take the economy's pulse.

The chief executive of home builder D.R. Horton said at an analysts' conference that the current year for his company was "going to suck," spurring worries about weakness in housing.

"The housing market, which is the weak spot in the economy ... is the main fear of a recession, and the main fear on earnings" growth, said Milton Ezrati, senior economic strategist at Lord Abbett & Co. in Jersey City, New Jersey.

D.R. Horton's stock, which had been up before the last half hour of trading, dropped to finish down 1 penny at $24.55.

Also on the economic front, the Federal Reserve's Beige Book of economic conditions showed the central bank was seeing slower growth in several regions.

Chicago Federal Reserve President Michael Moskow also said inflation was still a risk, adding that he would not rule out another interest-rate hike.

ENERGY SECTOR CUSHIONS THE FALL

Crude oil for April delivery CLJ7 rose $1.13, or 1.9 percent, to settle at $61.82 a barrel on Wednesday after a government report showed a surprising drop in U.S. crude supplies.

Exxon Mobil ranked as the top positive influence in the S&P 500 and helped limit the broad market index's decline. Exxon Mobil's stock rose 0.9 percent, or 64 cents, to $71.64. The stock also helped curb the Dow's loss.

Shares of Exxon rivals ConocoPhillips (COP.N) gained 2 percent, or $1.34, to $67.16, and Chevron (CVX.N) climbed almost 1 percent, or 66 cents, to $68.33.

Earlier in the session, the Dow managed to climb 49.35 points from Tuesday's close to a session high at 12,256.94. The S&P 500 rose as high as 1,401.16, up slightly less than 6 points on the day, and the Nasdaq reached a session high at 2,388.78, a gain of less than 4 points from Tuesday's close.

Outside the energy sector, the higher oil prices were seen as another reason to sell stocks, due to concerns that energy costs would weigh on corporate profits.

The biggest drag on the blue-chip Dow average was Procter & Gamble Co. (PG.N), down 1.4 percent, or 86 cents, at $62.08, while the heaviest weight on the S&P 500 was General Electric Co. (GE.N), down 1.1 percent, or 39 cents, to $34.33.

Among the Nasdaq's biggest decliners were database software maker Oracle Corp. (ORCL.O), down 2.3 percent, or 39 cents, at $16.49; Microsoft Corp. (MSFT.O), down 0.8 percent, or 22 cents, at $27.61, and Intel Corp. (INTC.O), the dominant chip maker, down 1.4 percent, or 28 cents, at $19.12.

A bright spot was Fremont, which soared 25.8 percent, or $1.75, to $8.53 after Bloomberg News reported that the company told employees it is in talks with five or six companies interested in buying its residential mortgage business.

Trading was fairly active on the New York Stock Exchange, where about 1.72 billion shares changed hands, below last year's estimated daily average of 1.84 billion shares. On the Nasdaq, about 2.07 billion shares were traded, above last year's daily average of 2.02 billion.

On the NYSE, advancing shares were about even with declining shares. On the Nasdaq, about three stocks fell for every two that rose.