Dow now at 9,067, down 40 points.
NEW YORK (AP) — The latest durable goods report is giving the
stock market new reasons to worry about the economy.
Stocks fell Wednesday after the Commerce Department said orders to
U.S. factories for big-ticket manufactured goods dropped an
unexpectedly steep 2.5 percent in June, the latest sign that the
economy could remain troubled for some time. The market’s July
rally has been on hold since Friday as investors look for clues
about the economy’s direction.
The drop in orders reflected the troubles in the auto industry and
a sharp drop in demand for commercial aircraft. It was the largest
slide in five months. Economists were expecting a decrease of 0.6
percent.
Russell Croft, portfolio manager at Croft Leominster Investment
Management in Baltimore, cautioned against reading too much into
one economic number because he expects readings will continue to
come in mixed as the economy begins to recover.
“There’s a good economic number and then there’s a bad number and
that’s probably what you’d expect at this juncture of the
recession,” he said. “Hopefully it’s two steps back and three steps
forward.”
In midday trading, Dow Jones industrial average fell 57.29, or 0.6
percent, to 9,039.43. The Standard & Poor’s 500 index fell 8.17, or
0.8 percent, to 971.45, while the Nasdaq composite index slid
15.05, or 0.8 percent, to 1,960.46.
On Tuesday, stocks finished mixed after several corporate earnings
reports and the Conference Board’s reading on consumer confidence
fell short of expectations.
Energy company stocks dragged on the overall market after crude
inventories rose more than expected last week, according to a
weekly Energy Department report. The rise prompted worries that
weakness in the economy was curbing demand for energy.
Occidental Petroleum Corp. fell $2.44, or 3.4 percent, to $69.25,
while Schlumberger Ltd. fell $1.84, or 3.4 percent, to $52.76.
Light, sweet crude fell $3.94 to $63.29 a barrel on the New York
Mercantile Exchange.
In corporate news, Microsoft Corp. and Yahoo Inc. announced a
10-year deal that gives Microsoft access to the Internet’s
second-largest search engine audience. Microsoft rose 3 cents to
$23.50, while Yahoo fell $1.89, or 11 percent, to $15.33.
Media conglomerate Time Warner Inc. said its second-quarter profit
fell 34 percent on lower revenue in the company’s publishing, movie
and online properties. Its earnings topped estimates but revenue
fell short of projections. The stocks rose 23 cents to $26.78.
Sprint Nextel Corp. fell 49 cents, or 10.7 percent, to $4.10 after
its loss widened in the second quarter as revenue and subscribers
continued to fall.
Investors have grown cautious after a two-week surge of 11 percent
in major stock indexes that began when earnings reports were
stronger than expected. A handful of disappointing earnings reports
earlier in the week reminded investors that an economic recovery
may still be far off.
The market will be looking for insights into the economy when the
Federal Reserve releases its beige book report at 2 p.m. EDT. The
report is a regional snapshot of economic activity.
About two stocks fell for every one that fell on the New York Stock
Exchange, where volume came to 439.3 million shares compared with
506.5 million traded at the same point Tuesday.
The Russell 2000 index of smaller companies fell 3.92, or 0.7
percent, to 548.03.
Meanwhile, bond prices rose, pushing yields lower. The yield on the
benchmark 10-year Treasury note fell to 3.64 percent from 3.69
percent late Tuesday.
The dollar was mixed against other major currencies, while gold
prices fell.
Overseas, Japan’s Nikkei stock average rose 0.3 percent. In
afternoon trading, Britain’s FTSE 100 rose 0.5 percent, Germany’s
DAX index rose 1.9 percent, and France’s CAC-40 advanced 1.1
percent.
