[R]11:30AM Weak housing data sent averages further down. Dow dropped 200 points.[/R]

U.S. market averages posted steep declines, as some strong earnings failed to offset continued worries about credit markets and the housing sector. The Commerce Department said that sales of new homes dropped 6.6% in June to a seasonally adjusted annual rate of 834,000 units, the largest percentage drop since January. Oil prices hovering round $77 a barrel also weighed.

The Dow dropped nearly 200 points, led by aluminum producer Alcoa Inc. (A: chart) which fell 5.1%, followed by Citigroup (C: chart), down 3%. A surprising profit drop from Dow component Exxon Mobil Corp. (XOM: chart) weighed on energy stocks. Exxon Mobil's stock fell 3.3%, as it missed its profit forecast. Homebuilder D.R. Horton Inc. (DHI: chart) was a heavy drag on the market, falling 4.5% as it swung to Q2 loss.

Among other companies posting quarterly results, diversified technology company 3M Co. (MMM: chart) added 1% after it said its Q2 net earnings rose 3.9% on the back of solid segmental performance. Qualcomm (QCOM: chart) posted Q3 earnings jump to 47 cents per share from 37 cents last year on 19% revenue increase. The company lifted its 2007 earnings and revenue outlook.

By sector, transportation, airline and financial stocks stood out among losers. In late morning trading, the Dow fell 217.36, or 1.58% to 13,567.71. The Standard & Poor's 500 index was down 28.97, or 1.91%, at 1,489.12 and the Nasdaq composite index tumbled 47.39, or 1.79%, to 2,600.78.


[R]10:00AM New York – Shanghai gains bucking the regional trend. Baidu.com surges in New York trading.[/R]

Shanghai Composite Index gained 0.5% to 4,346.45 and Hang Seng Index fell 0.64% or 150.49 to close at 23,211.69.

Government of China today allowed the state controlled insurance companies to invest in overseas companies and properties. Moody’s raised rating for China to A1 and to A2 from A3 for Hong Kong. China’s foreign reserve of $1.3 trillion and foreign debt of $323 billion played a key role in the debt rating revision. Another factor that played a key role is that Chinese government has managed to increase its share of GDP to 20% from 10% in less than a decade. While Hong Kong government has no debt, has third largest reserve of foreign exchange in Asia.

Profit expectations kept market averages at the elevated level in Shanghai. Airlines, banks, brokerage, and Internet companies led the rally.

Baidu.com shares surged 17% in New York trading this morning after the company reported second quarter earnings of 142 million yuan from 58.5 million yuan on sales growth of more than 100% to 401.3 million yuan. The company forecasted third quarter sales of between 492 million yuan and 506 million yuan. The revenue of the search engine companies are likely to triple in the next five years as more people use Internet to search information in China. There are more than 150 million users in China, second largest user base in the world but the search engine advertising revenue is less than $220 million this year. The search engine market ads are expected to grow fourfold in the next five years.

Local analysts estimate that Baidu.com has more than 50% market share in Chinese searc market and is expected to remain leader for the foreseeable future followed by Google with less than half the market share of Baidu.com.

Haitong Securities Co. reported first half profit of 2 billion yuan from 214 million yuan a year ago on rising stock market indexes and feverish online day trading. Revenue in the first jumped three fold to 4.8 billion yuan. The company with a branch network of 124 locations and 2 million accounts earned 650 million yuan in the year 2006. the company has filed to sell 1 billion stock at 13.15 yuan in a private placement and expects approval from the government to list its share on the exchange by merging with a shell company Shanghai Urban Agro-business Co.


[R]09:45AM Wall Street opened lower, weighed down by credit markets concerns and rising oil.[/R]

Wall Street opened steeply in the red, dragged down by continuous worries in credit markets and the housing sector, as well as surging oil prices. The Commerce Department said that sales of new homes dropped 6.6% in June to a seasonally adjusted annual rate of 834,000 units, the largest percentage drop since January.

In addition, weak results posted by homebuilders added built on concerns. D.R.Horton (DHI: chart) swung to a Q3 loss of $2.62 a share, from net income of 93 cents a share a year ago. The stock dropped 4.5%. Among other companies releasing quarterly results, Dow Chemical (DOW: chart) reported that its net income increase to $1.07 a share, from $1.05 a share last year, with sales rising 6% to $13.27 billion. The results beat analyst expectations, but the stock dropped 4.3%.

Further on the earnings news front, oil giant Exxon Mobil Corp. (XOM: chart) posted Thursday an unexpected drop in Q2 profit, hurt by lower natural gas prices. However, the company released net income of $10.26 billion, the fourth-largest quarterly profit ever recorded by a publicly traded U.S. company. On a per-share basis, Exxon Mobil earned $1.83 a share, up from $1.72 from a year ago, missing forecast of $1.96 a share. Company’s revenue fell to $98.35 billion from $99.03 billion a year ago but topped estimates of 97.6 billion. Exxon Mobil shares slipped 2.5%.

In morning trading, the Dow Jones industrial average fell 67.71, or 0.49%, to 13,717.36. The Standard & Poor's 500 index was down 12.49, or 0.82%, at 1,505.60 and the Nasdaq composite index tumbled 15.73, or 0.59%, to 2,632.44.