Overnight Markets: Weak home sales data disrupts Wall Street rally

US stocks slipped on Thursday led by housing-related shares after weaker-than-expected home sales data and mixed earnings reports were seen by investors as possible warning of weakness ahead.

The Dow Jones industrial average reversed a rally and was down 22 points, or 0.18%, at 12,735. The Standard & Poor's 500 Index fell eight points, or 0.57%, at 1,318. The Nasdaq Composite Index declined 13 points, or 0.46%, at 2,805.

Market started on a positive note yesterday helped by the Federal Reserve's vow on Wednesday to keep interest rates near zero at least until the end of 2014. Equities also benefitted after data showed orders for durable manufactured goods increased more than expected in December.

But the gains were short-lived with housing-related shares leading the reversal after sales of new single-family homes declined for the first time in four months in December. The data came after Wednesday's soft pending home sales report and belied hope that housing may have reached a bottom.

Toll Brothers lost 5%, while the PHLX housing sector index fell 1.3%. PulteGroup retreated 2.4%. Lennar was down 2.9%.

Banking sector also fell, with SunTrust Banks shedding 5.2% after Deutsche Bank lowered its rating on the stock. Wells Fargo lost 3.8% and Fifth Third Bancorp slid 3%.

Among other decliners, AT&T fell 2.5% after posting a $6.7 billion quarterly loss, in part on a break-up fee for its failed T-Mobile USA merger. Nasdaq component Amgen shed 1.6% after the world's largest biotechnology company said it would pay more than $1 billion to buy Micromet. The takeover target’s shares jumped 32.1%.

On the positive side, the Dow Jone's losses were limited by Caterpillar, which rose 2.1% after the heavy equipment maker posted a jump in quarterly earnings. 3M also supported the bourse with a 1.2% surge after it reported higher-than-expected quarterly earnings.

In Asia, shares advanced on Friday in midday session led by energy and mining stocks after Japanese Prime Minister Yoshihiko Noda urged the central bank to take “bold” action to stem the yen’s gain.

The MSCI Asia Pacific Index rose 0.3% to 123 as of 12:30 p.m. in Tokyo. Japan’s Nikkei 225 Stock Average added 0.4%, and South Korea’s Kospi Index rose 0.3%. Hong Kong’s Hang Seng Index climbed 0.3%. Australia’s S&P/ASX 200 rose 0.9%. Stock markets in China are shut today for the Lunar New Year holiday.