Indices Slide into Negative Terrain

Some negative news including predictions of a sustained decline in the housing market in 2006 slowed the markets in December. The anticipated so-called Santa Claus rally never materialized, but other factors such as soaring consumer confidence numbers for December left investors scratching their heads. The Fed raised rates another quarterpoint in mid-December, the 13th such consecutive raise since June 2004. However, the Fed omitted prior language in their statement — that even with increases interest rates are still low — leading some on Wall Street to hope for the end of rate hikes. "It's really the Fed at this point that's kept the market in check," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers.

The rumored slowdown in housing markets was highlighted in the Anderson Forecast released by the University of California, Los Angeles in early December. The report said that the slowdown is likely to last several years. "We expect housing to start slowing the economy this quarter or the next," said Edward Leamer, director of the study.

For the complete listing of Builders' and Building Product Manufacturers' indices as well as more information on the Wall Street Report, visit www.housingzone.com/economics