US Financial Stocks Plummet On Weak New-Home Sales Data

The financial sector plunged after rising in early trading hours today, as economic data released by the Commerce Department showed a sharp dip in May new-home sales in the US. The news aggravated fears that home prices may fall further. Sales of new US homes fell a dramatic 33% in May due to the expiration of tax credits of some buyers. According to separate news, a group of bankers mentioned that there has been a 6% slip in mortgage applications in the latest week. The Financial Select Sector SPDR Fund XLF today slipped 0.38% to $14.52, after dropping 1.6% in late trading hours yesterday. Earnings projections for Morgan Stanley MS and Goldman Sachs Group Inc GS were slashed by Barclays Capital today. According to analyst Roger Freeman, the state of financial markets has noticeably worsened since Q1 2010, marked by "sharply wider credit spreads, cash-derivative basis, declines in structured finance indices, sharply higher volatility and a 'flight-to-safety' trade in less risky assets." Shares of GS climbed 0.01%, while those of MS declined 0.81%, by 3:17 pm today. Read more from Benzinga's Markets.