While you were sleeping: US pending home sales drop

Wall Street crawled higher after a disappointing report on housing underpinned concern about the industry's struggle to recover a day before the US Federal Reserve is starting a two-day policy meeting.

The index of pending homes sales unexpectedly dropped, sliding 1.1 percent in June, after climbing 6 percent in May, according to a National Association of Realtors report.

"Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved," Lawrence Yun, NAR chief economist, said in a statement. "However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates."

In late afternoon trading in New York, the Dow Jones Industrial Average gained 0.09 percent, the Standard & Poor's 500 index increased 0.11 percent, while the Nasdaq Composite Index eked out a 0.03 percent gain.

Gains in shares of UnitedHealth and Exxon Mobil, up 1.2 percent and 1.1 percent respectively, propelled the Dow higher.

Investors are waiting for the end of the Fed meeting on Wednesday to gauge policy makers' take on the economy and the timing of an interest rate increase. Also, reports on second-quarter US gross domestic product and on the jobs market are due on Wednesday and Friday respectively.

Then there are second-quarter corporate earnings to digest too.

"It's another big week of earnings, with the jobs report on Friday," Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities, told Bloomberg News. "Sentiment in the short-term term is a little more cautious."

The US economy probably expanded at a 3.0 percent annual rate in the second quarter, according to a Reuters survey of economists. The world's largest economy shrank 2.9 percent in the first quarter.

"Pretty much across the board, components will look better," Jim O'Sullivan, chief US economist at High Frequency Economics in Valhalla, New York, told Reuters. " I do think we can sustain a 3 percent growth number for the next couple of quarters."

But some are worried the pace of recovery will fall short of expectations.

"We should expect a rebound in the second quarter, but we don't think the rebound is going to be as strong as the market expects," Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas, told Bloomberg News.

In Europe, the Stoxx 600 Index finished the session with a 0.2 percent decline. The UK's FTSE 100 Index inched 0.05 percent lower, while Germany's DAX fell 0.5 percent. France's CAC 40 rose 0.3 percent.

Shares in Lloyds Banking Group closed flat in London after the bank agreed to pay 226 million pounds in penalties for its role in manipulating benchmark interest rates.

(BusinessDesk)