1:00PM New York – U.S. stocks fell after the weekly oil report. Home builders fell on existing home sales outlook. Tech stocks meander after Cisco earnings were below expectations.

U.S. stocks turned negative after the release of weekly crude oil report and another monthly report that confirmed falling home sales.

Cisco dropped a fraction after it reported sales gain of 10.4% and a fall in net income of 5.4%. The news dragged tech stocks lower. EMC, Nortel, Dell and Hewlett Packard edged lower. However, IBM added 2% or $2.36 to $124.65. Cognizant and EXL Service, software outsourcing companies fell after reporting earnings. Cognizant fell 9% and EXL plunged 15%.

Crude oil fell after the weekly inventories report

Weekly petroleum inventory report suggested a rise in crude oil inventory at the end of last week. Inventories of distillate and gasoline were essentially unchanged.

Crude oil inventories rose to 325.6 million of barrel on May 2nd compared to 319.9 million on April 25th, 2008. Gasoline inventories 211.9 million barrels compared to 211.1 million a week ago and distillate fuel inventories were 105.7 million compared to 105.8 million barrels.

Domestic crude oil supply fell 1.7% to 5.1 million barrels a day and net imports fell 1.8% to 9.7 million barrels. Net imports fell 4.7% to 11.495 million barrels.

First quarter productivity rises

Department of Labor reported first quarter non-farm productivity rose at 2.2% annual rate after rising at a rate of 1.8% in the fourth quarter of 2007. Labor costs increased 0.2% in the quarter from a year ago. Hourly compensation increased 4.4% and manufacturing sector productivity increased at 4.1% after rising at 4.2% in the fourth quarter of 2007.

Home sales soften

An index of existing home resale fell in the March according to the information published by National Association of Realtors. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0% to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1% lower than the March 2007 index of 103.9.

Lawrence Yun, NAR chief economist said, “Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year.

Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied.”

The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.

Earnings review

The Walt Disney Company, worldwide entertainment company said second quarter revenues rose 11% to $8.71 billion from $7.9 billion a year ago. Net income in the quarter increased 22% to $1.1 billion or 58 cents per diluted share compared to net income of $931 million or 44 cents per share, a year ago.

Disney stock (DIS: chart) rose $1.09 to $34.85.

Tesoro Corporation, an independent petroleum refiner said first quarter revenues rose 68.5% to $6.53 billion from $3.88 billion a year ago. Net loss in the quarter was $82 million or 60 cents per diluted share compared to net income of $116 million or 84 cents per share, a year ago.

Tesoro stock (TSO: chart) stock rose 50 cents to $25.50.

Foster Wheeler Limited, an engineering and contract services provider reported first quarter revenues rose 2% to $547.2 million from $530 million a year ago. Net income in the quarter increased to $138.1 million or 95 cents per diluted share compared to net income of $114.8 million or 80 cents per share, a year ago.