WRAPUP 2-U.S. consumer confidence, home prices remain weak

* U.S. consumer confidence up in Oct, remains near lows

* U.S. home prices remain at recent lows

* Data reinforces possibility of Fed stimulus announcement
(Updates market prices, adds graphics, quotes, background)

By Julie Haviv

NEW YORK, Oct 26 (BestGrowthStock) – Data on Tuesday underscored
the fragility of the U.S. economic recovery, with consumer
confidence rising but still weak and home prices falling again
after gaining earlier in the year.

The reports reinforced the belief the U.S. Federal Reserve
will embark on another round of monetary policy stimulus to
support the economic recovery, possibly as soon as next week.

U.S. consumer confidence rose slightly in October but
remained near historically low levels as concerns about the
labor market persisted. For details double-click on
[ID:nN26127639].

The Conference Board, an industry group, said its index of
consumer attitudes rose to 50.2 in October from a revised 48.6
in September.

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For a graphic on U.S. consumer confidence, click on:
http://r.reuters.com/wup32q

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The Federal Reserve, which has already injected $1.7
trillion into the economy by purchasing mortgage-related and
government bonds, meets on Nov. 2-3.

Another round of quantitative easing, dubbed ‘QE2’, is
expected to focus on Treasury debt.

The labor sector — U.S. unemployment rate remains
stubbornly high at 9.6 percent — is one of the primary reasons
the housing market remains fragile.

President Barack Obama could lose control of Congress in
U.S. mid-term elections on Tuesday due to voter anxiety over
the jobs market and housing sector.

Prices of U.S. single-family homes fell for a second month
in August, hovering around recent lows after the expiration of
popular homebuyer tax credits, according to a Standard &
Poor’s/Case-Shiller report on Tuesday. [ID:nN2649346].

The price drop is largely a payback from the tax credits,
which induced gains earlier this year.

“At this point the big factor out there is the foreclosure
situation and it certainly doesn’t look very good. We have a
lot of excess supply to work through, a lot of potential
foreclosures and what appears to be an increasing legal mess,”
David M. Blitzer, chairman of the index committee at Standard &
Poor’s, told Reuters Insider. “It’s going to take quite a while
to get housing back on its feet.”

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For a graphic on home prices, click on:
http://r.reuters.com/fan32q

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The housing market has been struggling since home buyer tax
credits expired earlier this year. To take advantage of the tax
credits, buyers had to sign purchase contracts by April 30.
Contracts originally had to close by June 30, but that was
extended by three months.

U.S. stocks (Read more about the stock market today. ) were lower, with soft commodity prices and
disappointing results from the steel sector weighing on
materials stocks. The Standard & Poor’s 500 Index (.SPX: ) was
down 0.25 percent

U.S. Treasury debt (US10YT=RR: ) fell in price after a
two-year note auction, while the U.S. dollar extended gains
versus the euro (EUR=: ).

Another report on Tuesday showed home price gains in August
[ID:nWBT014211]. The U.S. Federal Housing Finance Agency home
price index is calculated using purchase prices of houses
financed by Fannie Mae (FNMA.OB: ) and Freddie Mac (FMCC.OB: ).

Home prices in August reflected conditions before banks
temporarily halted foreclosures due to questionable
documentation. Home prices may benefit from fewer foreclosures
in the mix, but any rise should prove to be temporary.

The housing market, however, remains highly vulnerable to
setbacks and most economists believe a recovery will be elusive
until the labor market improves.

FED EASING NOT A DONE DEAL

Some hope for the U.S. economy came by way of several major
U.S. companies on Tuesday.

Ford Motor Co (F.N: ) posted a higher-than-expected quarterly
profit on Tuesday and accelerated plans to cut debt and
borrowing costs to bring the automaker closer to an
investment-grade credit rating. [nN26109531]

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Graphic on Ford earnings http://r.reuters.com/byn32q
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DuPont (DD.N: ), the world’s fourth-largest chemical maker by
revenue, reported a higher-than-forecast quarterly profit and
boosted its 2010 earnings forecast above Wall Street’s
expectations. [nN26116954]

Additionally, three U.S. industrial companies posted
better-than-expected profits on Tuesday and provided generally
upbeat assessments of the global economic recovery, suggesting
Europe and North America may finally be stabilizing.
[nN26131303]

The upbeat outlooks could serve to fuel arguments that the
U.S. Federal Reserve may not need to pump more money into the
financial system next week and might wait longer.

“I think it’s still possible that QE2 is not a done deal
for November, even though the market has been trading as if it
is,” said Brian Dolan, chief economist at Forex.com in
Bedminster, New Jersey,

“This is one of the last bullets the Fed has in its gun and
it’s going to be very reluctant to fire it unless circumstances
are really dire,” he said. “It might be put off until the first
quarter. I think the market has started to consider that this
week.”

Nevertheless, an overwhelming majority of economists still
see the need for economic stimulus and expect clarification
next week.
(Additional Reporting by Wanfeng Zhou, Ernest Scheyder and
Steven Johnson in New York, Bernie Woodall and David Bailey in
Detroit and James B. Kelleher in Chicago; Editing by Andrew
Hay)

WRAPUP 2-U.S. consumer confidence, home prices remain weak