The Commerce Department reported Thursday that sales of new single-family homes dropped by 6.6 percent last month to a seasonally adjusted annual rate of 834,000 units. The decline was more than triple what had been expected and was the largest percentage drop since sales fell by 12.7 percent in January.

The fall in new home sales was just the latest piece of evidence this week of housing's troubles. Sales in the much larger existing home market also fell in June, dropping by 3.8 percent to an annual rate of 5.75 million units, the slowest pace in nearly five years.

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DEARBORN, Mich. (AP) — Ford surprised Wall Street Thursday by posting its first quarterly profit in two years. Then it spoiled the party by warning investors that it still expects big losses in the next two quarters and no return to full-year profitability until 2009.

Ford squeezed most of the gains out through cost cutting, mainly with a roughly 30 percent decline in jobs, and good sales overseas.

Now Ford needs its North American division to start turning a profit. That could be difficult with the company's U.S. rivals and Japanese automakers breathing down its neck.

Still, investors applauded Ford's $750 million second-quarter profit — also helped by higher net pricing on its vehicles. Ford shares rose on a day when many other companies' shares tumbled.

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HOUSTON (AP) — Don't let Exxon Mobil Corp.'s 1 percent drop in second-quarter profit fool you. It was still the fourth-best quarterly result for an American company — ever. And analysts say the company's massive global footprint points to more big quarters.

The world's largest publicly traded oil company said Thursday lower natural gas prices and a drop in production hurt results for the April-June period, contributing to a rare miss of Wall Street expectations.

But Exxon Mobil's net income of $10.26 billion was still eyepopping and off only slightly from the $10.36 billion it earned in the second quarter of 2006 — the third-best U.S. quarterly result. It already holds the record for the No. 1 quarterly and annual profits.

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NEW YORK (AP) — Oil prices dropped about $1 per barrel Thursday amid speculative selling after topping $77 a barrel earlier in the day.

Light, sweet crude for September delivery fell 93 cents to settle at $74.95 a barrel on the New York Mercantile Exchange after climbing earlier on a drop in crude oil inventories at a key Oklahoma terminal.

September Brent crude lost $1.14 to settle at $75.18 a barrel Thursday on the ICE Futures exchange in London.

Meanwhile, the Dow Jones industrials dove more than 400 points, though there was no obvious cataylst behind both markets dropping in tandem, said Tim Evans, an energy analyst at Citigroup in New York.

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PHOENIX (AP) — U.S. airline stocks dropped Thursday as carriers continued to struggle with high fuel prices and maintenance, though AirTran Holdings Inc. increased second-quarter profits by cutting costs in other areas.

Tempe, Ariz.-based US Airways Group Inc. said its second-quarter earnings fell 14 percent, in part because of fuel costs. Chairman and Chief Executive Doug Parker said the carrier also has invested heavily this quarter in improving its operations in response to low customer service ratings and a computer glitch that shut down hundreds of self service kiosks in March.

US Airways shares fell 27 cents to $34.57 Thursday.

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LOS ANGELES (AP) — The national housing slump could lead to billions of dollars in losses for Wall Street investors as it drags on for at least another year and mortgage defaults increase, economists said Thursday.

The outlook on eroding credit quality in the U.S. mortgage market by Moody's Economy.com anticipates that more than 1.2 million first mortgage loans will default this year and another 1.3 million will follow next year.

That compares with about 900,000 defaults last year and about 800,000 in 2005, Mark Zandi, the Web site's chief economist, said in a conference call.

Hedge fund investors will lose between $100 billion and $125 billion as a result, he said.

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COLUMBIA, S.C. (AP) — Shareholders approved a deal Thursday that would combine Canadian forest products company Abitibi-Consolidated LLC with South Carolina newsprint maker Bowater Inc., company officials said.

Seventy percent of Bowater's shares were voted in favor of the all-stock deal at the annual meeting in Atlanta, the company said. Abitibi said 80 percent of its shares were voted in favor of the deal at a special meeting in Montreal.

The new company, to be called AbitibiBowater Inc., would be the third-largest forest products company in North America. It would be based in Abitibi's hometown of Montreal.

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GRAND RAPIDS, Mich. (AP) — Kellogg Co. raised its full-year guidance on Thursday after the cereal and convenience food company reported that strong revenue growth and improved margins helped boost second-quarter profit by 13 percent.

Net income rose to $301 million, or 75 cents per share, in the three months ended June 30 from $267 million, or 67 cents per share, a year earlier.

Sales rose 8.7 percent to $3.02 billion from $2.77 billion, with internal net sales growth, which excludes the effect of foreign-currency translation, of 6 percent.

On average, analysts surveyed by Thomson Financial forecast a quarterly profit of 70 cents per share on sales of $2.93 billion.

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WEST PALM BEACH, Fla. (AP) — Office Depot Inc., the nation's second-largest office products retailer, said Thursday its profits dipped 8 percent in the second quarter as weak sales in North America offset double-digit growth in international revenues.

Net income fell to $109.1 million, or 40 cents per share, from $118.3 million, or 41 cents per share, a year ago. Sales rose to $3.63 billion from $3.49 billion a year earlier.

Excluding charges, the company earned 43 cents per share in the most recent quarter. That met the average estimate of analysts polled by Thomson Financial. Analysts also expected sales of $3.69 billion.

The company's shares fell $1.79, or about 6.2 percent, to $27.16 on Thursday.

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GRAND RAPIDS, Mich. (AP) — Dow Chemical Co. reported a 2 percent increase in profit for the second quarter as strong international growth offset weaknesses in the North American housing and automotive sectors and the effect of rising petroleum prices.

Shares fell $2.22, or 4.9 percent, to close at $43.45 as Wall Street suffered its one of its worst plunges of the year.

Net income climbed to $1.04 billion, or $1.07 per share, for the three months ended June 30 from $1.02 billion, or $1.05 per share, a year ago.

Revenue jumped 6 percent to $13.27 billion from $12.51 billion in the year-ago quarter.