Buffett’s USG Holding Slumps Amid Bets on QE TaperingLeslie Picker
USG Corp., the building supplier whose largest investor is Warren Buffett’s Berkshire Hathaway Inc., slumped amid concern that construction would slow if the Federal Reserve begins to curb bond purchases designed to stimulate the economy.
The drop at USG to the lowest price in a month joined declines at Vulcan Materials Co., a sand and gravel producer, and Martin Marietta Materials Inc. The SPDR S&P Homebuilders exchange-traded fund slipped to the lowest level since May 2.
The Fed may slow its $85 billion in monthly bond purchases, known as quantitative easing, this summer, Federal Reserve Bank of San Francisco President John Williams said today in Stockholm. Speculation that the Fed would begin phasing out the program helped push global bond markets to their biggest loss since 2004 in May.
“Rising interest rates will annihilate the real estate industry,” Jeffrey Sica, who helps oversee $1 billion as president of Sica Wealth Management LLC in Morristown, New Jersey, said by telephone. “If developers know they can’t get buyers, they’re going to hold off on purchasing building material.”
USG dropped 4 percent to $26.23, the lowest closing price for the Chicago-based company since May 2. Birmingham, Alabama-based Vulcan Materials fell 0.7 percent to $53.21 and Raleigh, North Carolina-based Martin Marietta declined 0.3 percent to $108.69.