DJIA and Home Depot, Inc. (NYSE: HD) may fall due to U.S. real estate market downturn

The Home Depot, Inc. (NYSE: HD) shares and the DJIA may fall

In brief: The analysts fear the slowdown in the U.S. housing market could adversely affect many companies. Mortgage crisis remains a major problem for the U.S..

The Dow Jones Industrial Average remains in the green zone today, gaining up to 1% in early trading. A bullish trend has captured the market. At the same time, The Home Depot, Inc. (NYSE: HD) shares remain flat. The question is how it could happe?

The fact is that the downturn in the U.S. real estate may cause renewed economic recession. So far, the real estate market has caused 7 out of the recent eight recessions, and this time it may greatly undermine the recovery provess. Construction costs and related durable goods (such as furniture and cookers) accounted for 15% of GDP in the second quarter. The local boom caused by a program of tax incentives for real estate acquisition was cut short by a downturn. Accordingly, curtailing construction will hit growth both directly and through related sectors. In addition, falling house prices in the U.S. indirectly hits the demand by changing the collateral value of assets.

Elena Koschiko
2010-08-23 14:48, Economics.

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