Feeling Dizzy? You Must Be Playing The Market

Feeling Dizzy? You Must Be Playing The Market

Click Here! Joshua Lipton, 07.25.07, 3:00 PM ET

Wall Street traders couldn't be blamed for suffering from motion sickness on Wednesday: the stock market see-sawed throughout morning trading, with the Dow Jones industrial average up nearly 100 points early in the day, then slipping into the red, and then bouncing back into the green.

Investors were at first cheered by very solid earnings reports from Boeing and Amazon.com, both of which shot past analysts' forecasts. However, those buoyed spirits then wilted as new reports indicated that the U.S. housing slump is far from over.

Boeing (nyse: BA - news - people ) saw its shares fly high as it told Wall Street that it raked in earnings of $1.1 billion in the second quarter. The aircraft maker said it earned $1.35 per share versus a loss of $160 million, or 21 cents a share, for the year-ago period.

Revenue rose 13.6%, to $17.0 billion.

Those numbers easily beat analyst forecasts of earnings per share of $1.16 on sales of $16.2 billion.

Boeing also sees better times ahead, and it said it would raise its 2007 guidance. (See: " Boeing Cruises To New Heights")

Traders also felt a kick of optimism as they read over the balance sheet of Amazon.

Amazon (nasdaq: AMZN - news - people ) said its second-quarter profit more than tripled. Earnings increased to $78.0 million, or 19 cents per share, from $22.0 million, or 5 cents per share, from the year-ago period.

Revenue rose 38.1%, to $2.9 billion.

Those results topped Wall Street forecasts, earning the company a host of analyst upgraded and renewed enthusiasm from traders. (See: " Amazon: Dot-Com Deja Vu?")

But the enthusiasm felt in the morning then cooled as investors were hit with a new report demonstrating the continuing problems plaguing the housing sector.

The National Association of Realtors announced that sales of existing homes declined by 3.8% in June to a seasonally adjusted annual rate of 5.75 million units, the slowest sales pace in 4.5 years. That drop in sales was larger than had been expected and gave investors new reasons to worry that the sagging housing sector may not recover any time soon.

Steven Goldman, chief market strategist at Weeden, doesn't see much reason for optimism when it comes to the U.S. housing market in the near term.

"Housing is weak," Goldman told Forbes.com. "It will stay weak for awhile. The trend hasn't bottomed yet. It will take time to sort things out."

More broadly, Goldman also expects the volatility in the U.S. financial markets to continue.

He said, "There are concerns here, specifically the average price-earnings ratio is at 19.7. That is a high reading, the highest in fact since 2004. It suggests that the average stock is considered fully valued."

Goldman added, "The volatility will continue. Leadership is diminishing. The market is vulnerable to choppy trading and declines of substance."

In early afternoon trading, the Dow Jones industrial average was up 0.1%, or 14.72 points, to 13,731.67. The Nasdaq increased 0.01%, or 0.26 points, to 2,640.12. The S&P 500 climbed 0.1%, or 0.91 points, to 1,511.95.

Gainers included Eagle Bulk Shipping (nasdaq: EGLE - news - people ). The ship operator announced that it would buy 26 new vessels, more than doubling the New York-based company's fleet. Shares climbed $3.24, or 13.9%, to $26.63.

Shares of Dade Behring Holdings (nasdaq: DADE - news - people ) rose after the company, which makes instruments used in laboratories for diagnosis and research, posted second-quarter results that topped analyst expectations. Its shares kited up $18.35, or 32.8%, to $74.26.

The Associated Press contributed to this article.