Wednesday’s rally in major stock indexes included a modest advance by home builders
This news didn’t help many stocks linked to the faded home-building boom.
For example, Fortune Brands, based in Deerfield, is one of the best-rated stocks, according to analysts tracked by Bloomberg News. But shares have fallen 14.5 percent since early May, more than double the 7 percent slide in the benchmark Standard & Poor’s 500 index in the same period.
Shares fell 46 cents Wednesday, to $69.49, the lowest level since October 2004.
Fortune Brands is a diversified manufacturer of brand-name products in three sectors: beverages (Jim Beam), sporting goods (Titleist) and home products (Moen).
Apparently, its $4 billion home-products division is causing the trouble. Moen plumbing fixtures are installed in many high-end homes. Two-thirds of sales are to the repair and remodeling market, with one-third to home construction.
The company recently acquired SBR, maker of Simonton vinyl windows, paying its own shares valued at $82.
“You might think we’re delusional or not very bright,” Chief Executive Norman Wesley told a Credit Suisse analyst conference Tuesday.
But Wesley said his company’s home-products division has performed well in previous housing downturns and noted that the company boosted its forecast for home-products results in April, after its first-quarter report.
But he acknowledged that given current uncertainty about interest rates and economic growth, “it’s difficult to get people attracted” to home-products stocks. Shares dropped 2 percent on Tuesday.
Wednesday’s action: Major stock indexes bounced higher, giving the Dow Jones industrial average its third single-day gain in June. Advancing stocks held narrow leads over losers in heavy trading.
The Dow rose 110.78 points, to 10,816.92, led by gains in Boeing, Caterpillar and Exxon Mobil. JPMorgan, Citicorp and Merck lost ground.
The Standard & Poor’s 500 index added 6.35, to 1230.04. The Nasdaq composite index rose 13.53, to 2086. The Russell 2000 index of small-company stocks gained 4.37, to 677.09.
Crude oil futures edged up 58 cents a barrel, to $69.14. Other commodities were mixed.
