March 26 (Bloomberg) -- The Dow Jones Industrial Average fell for the first time in six days, led by financial and industrial companies, after an unexpected decline in new-home sales heightened concern that economic growth will slow.

Citigroup Inc. pulled banks lower, while Honeywell International Inc. paced losses among industrial shares on concern the deteriorating housing market will reduce demand for loans and construction equipment. A jump in oil prices spurred gains in energy shares, lifting the Standard & Poor's 500 Index to its fifth advance in six days. Dell Inc. helped boost the Nasdaq Composite Index.

The fewest new home sales in seven years dimmed prospects for a quick rebound in real estate. The Commerce Department's report curtailed a rally that lifted stocks to their biggest weekly advance in four years.

``The sloppy housing numbers were a bit of a slap in the face to the market,'' said Philip Orlando, who helps manage $260 billion as chief equity market strategist at Federated Investors Inc. in New York. ``Investors are saying to themselves today, maybe this housing thing is worse than we thought and maybe the impact on corporate profits is worse than we thought.''

The Dow average slid 11.94, or 0.1 percent, to 12,469.07. The S&P 500 added 1.39, or 0.1 percent, to 1437.50. The Nasdaq increased 6.70, or 0.3 percent, to 2455.63.

Stocks surged last week, giving the S&P 500 its biggest weekly gain since the war in Iraq began in March 2003, after the Federal Reserve indicated it is no longer biased toward higher interest rates.

New-Home Sales

New-home sales dropped 3.9 percent to an annual pace of 848,000 in February. Economists had predicted they would rise to a 985,000 rate, according to a survey by Bloomberg. Today's report contrasts with data last week showing a rise in housing starts and an unexpected jump in sales of existing homes. Existing homes make up 85 percent of the market.

U.S. Treasuries rose and the dollar fell against the euro after the government's housing report. Crude oil jumped to the highest this year, rising 1 percent to $62.91 a barrel in New York.

Weakness in housing ``has the potential to spread and derail the Fed's scenario that housing and manufacturing will bottom in the first half 2007 and the economy will re-accelerate in the second half,'' said James Awad, who oversees about $1.3 billion as chairman of Awad Asset Management in New York. ``This data calls that assumption into question, which is why the market is selling off.''

Investor Sentiment

Growing concern about the housing slump and rising fuel costs are hurting investor sentiment, according to a UBS AG poll. The UBS/Gallup Index of Investor Optimism dropped in March to the lowest level in six months, UBS said today.

A gauge of financial shares in the S&P 500 had the sharpest decline among 10 industries. Citigroup, the world's biggest financial-services firm, dropped 18 cents to $51.54.

Industrial shares were the second-worst performers. Honeywell, the world's biggest maker of airplane controls, declined 37 cents to $47.34. United Technologies Corp., the maker of Otis elevators and Pratt & Whitney jet engines, fell 32 cents to $66.41.

All 16 homebuilders in S&P indexes retreated, bringing their 2007 loss to 15 percent. Lennar Corp. decreased $1.04 to $44.54, Centex Corp. fell 67 cents to $43.17 and Pulte Homes Inc. slipped 31 cents to $27.25.

Mortgage lenders also dropped. Fremont General Corp., one of two companies ordered to stop offering subprime mortgages, tumbled 49 cents to $8.15. Countrywide Financial Corp., the biggest U.S. mortgage lender, slid 59 cents to $36.24.

Trading

Eight stocks fell for every seven that rose on the New York Stock Exchange. Some 1.47 billion shares changed hands on the Big Board, 7.4 percent less than the three-month daily average.

Dell gained 79 cents to $23.62 after Goldman, Sachs & Co. upgraded the world's second-biggest personal-computer maker to ``buy'' from ``neutral.'' The stock may climb once Dell files full financial statements, which would allow the company to pursue a stock buyback, Goldman Sachs said. The consumer business will also recover under newly hired Ron Garriques, a former Motorola Inc. executive, according to Goldman Sachs.

EBay Inc. climbed $1.39 to $33.22 after Goldman Sachs recommended buying the shares, saying they may climb to $40 this year. Goldman also raised its revenue and profit estimates for EBay on a better-than-expected increase in new listings.

Apple Inc. added $2.33 to $95.85. The company may benefit from wider iPhone profit margins and strong demand for Macintosh personal computers, said Deutsche Bank Securities, which raised its share-price forecast and earnings estimates for Apple.

Microsoft Corp. erased early losses after the world's biggest software maker said it sold 20 million licenses of the Windows Vista operating system in its first month of wide availability, topping some analysts' estimates. The shares advanced 20 cents to $28.22.

Boston Scientific

Boston Scientific Corp. plunged to a level not seen since September 2002 after researchers told a medical meeting on March 24 that a drug-coated stent from Abbott Laboratories was safer and more effective than Boston Scientific's Taxus stent.

Analysts who cut their earnings and revenue estimates for Boston Scientific included Glenn Novarro at Banc of America, Bruce Nudell at Sanford C. Bernstein & Co., and Dhulsini de Zoysa of Cowen & Co.

Shares of Boston Scientific fell $1, or 6.6 percent, to $14.22 for the biggest loss in the S&P 500. Abbott gained $3.38 to $57.24, the highest since at least July 1980. Abbott's 6.3 percent advance was the most in the S&P 500.

Goodyear

Goodyear Tire & Rubber Co. rose $1.47 to $31.76. North America's biggest tiremaker sold a unit that makes hoses and conveyor belts to buyout firm Carlyle Group for $1.47 billion to focus on its tire business. Goodyear's stock traded at the highest level since December 1999.

Among other deals, Beckman Coulter Inc., a maker of laboratory equipment, said it will acquire Biosite Inc. for $1.55 billion, or $85 a share, to add heart-disease diagnostic tests. That's equivalent to a 53 percent premium to the closing price on March 23. Beckman Coulter shares fell $4.57 to $62.51, while Biosite jumped $28.42 to a record $83.80. The stock's 51 percent gain was the most ever.

Osiris Therapeutics Inc. rallied $2.87, or 16 percent, to $20.77. The company's easy-to-administer stem-cell treatment helped patients recover after a heart attack and eased their symptoms, according to research presented at the American College of Cardiology meeting.

Schering-Plough Corp. gained as the drugmaker and Merck & Co. said they would develop a single pill combining their Zetia cholesterol drug with Pfizer Inc.'s Lipitor, the world's top- selling medicine.

Combination Pill

The combination pill, designed to attack artery-clogging cholesterol using two different methods, will come on the market once Lipitor's patent expires, Merck said. Lipitor's patent may run out as soon as 2010.

Schering-Plough advanced 52 cents to $25.14, while Merck lost 38 cents to $44.07. Pfizer rose 1 cent to $25.67.

The Russell 2000 Index, a benchmark for companies with a median market value of $652 million, fell 0.1 percent to 808.94. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, gained 0.1 percent to 14,563.65. Based on its advance, the value of stocks increased by $9 billion.

Abbott Laboratories (ABT US)
Apple Inc. (AAPL US)
Beckman Coulter Inc. (BEC US)
Biosite Inc. (BSTE US)
Boston Scientific Corp. (BSX US)
Centex Corp. (CTX US)
Citigroup Inc. (C US)
Countrywide Financial Corp. (CFC US)
Dell Inc. (DELL US)
EBay Inc. (EBAY US)
Fremont General Corp. (FMT US)
Goodyear Tire & Rubber Co. (GT US)
Honeywell International Inc. (HON US)
Lennar Corp. (LEN US)
Merck & Co. (MRK US)
Microsoft Corp. (MSFT US)
Osiris Therapeutics Inc. (OSIR US)
Pfizer Inc. (PFE US)
Pulte Homes Inc. (PHM US)
Schering-Plough Corp. (SGP US)
United Technologies Corp. (UTX US)

To contact the reporter on this story: Michael Patterson in New York at mpatterson10@bloomberg.net.

Last Updated: March 26, 2007 17:11 EDT