Stocks fell for a third day Friday after disappointing reports on manufacturing and home sales further dampened enthusiasm about the state of the economy.
NEW YORK (AP) — Stocks fell for a third day Friday after disappointing reports on manufacturing and home sales further dampened enthusiasm about the state of the economy.
Durable goods orders, a key indicator for the manufacturing industry, fell unexpectedly in August. It was the second drop in three months and the latest sign that any rebound inside the nation’s factories is likely to be slow.
The Commerce Department said orders for goods expected to last at least three years fell 2.4 percent, after rising 4.8 percent in July. Economists polled by Thomson Reuters had forecast an increase of 0.5 percent.
Meanwhile, the Commerce Department also reported that new home sales inched up to 429,000 last month from 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000.
Quarterly results from BlackBerry maker Research In Motion Ltd. fell short of expectations and weighed on the tech-laden Nasdaq composite index.
Stocks fell Thursday following a weaker-than-expected report on existing home sales and drops in commodities prices, which hurt materials and industrial stocks. The market also slid Wednesday on worries that the Federal Reserve would be too quick to withdraw its financial supports from the economy.
With major indicators like the Standard & Poor’s 500 index up 55.3 percent from a 12-year low in March, market analysts have been saying that a break in the advance is necessary.
“We had a market that got considerably overbought,” said Steven Goldman, chief market strategist, Weeden & Co. in Greenwich, Conn. “We still think things should stay relatively orderly in the pullback and we’re still likely to see further gains.”
According to preliminary calculations, the Dow Jones industrial average fell 42.25, or 0.4 percent, to 9,665.19.
The broader Standard & Poor’s 500 index fell 6.40, or 0.6 percent, to 1,044.38, and the Nasdaq fell 16.69, or 0.8 percent, to 2,090.92.
Four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 1.2 billion shares compared with 1.4 billion Thursday.
For the week, the Dow is down 1.6 percent, the S&P 500 index is off 2.2 percent and the Nasdaq is down 2 percent.
The week’s economic data weren’t bad and still far better than only months ago but the numbers on new and existing home sales as well as durable goods still fell short of expectations. That could signal that investors have been underestimating how long it might take the economy to recover. Analysts also caution that more data will be needed to determine whether one down month is the start of a trend or an anomaly.
Next week, reports on employment likely will shape investors’ views of the economy. The Labor Department’s September employment report is due at the end of the week and is often regarded as the most important economic report of each month because consumer spending is so important to the U.S. economy. Figures are also expected on consumer confidence, manufacturing, factory orders and home prices.
On Friday, investors looked past an improvement in the Reuters/University of Michigan consumer sentiment index, which rose to 73.5 in September from 65.7 in August. The index stands at the highest level since the start of 2008. That’s a welcome sign because more upbeat consumers could be more likely to spend.
Some investors might use the market’s occasional retreats as opportunities to boost their holdings.
Burt White, chief investment officer at LPL Financial in Boston, contends investors who are parked in safe investments like government bonds and upset they missed the run in stocks should re-examine their portfolio. He said they might consider gradually shifting some money from ultra-safe debt to riskier but higher-returning areas like high-yield bonds.
He said investors could then consider moving into the types of stocks that often fare well early in an economic recovery. These include stocks like technology, commodities producers, emerging markets and small-capitalization stocks. All of them have been strong performers.
White predicts investors will tire of earning little in the safest investments.
Bond prices traded mixed Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.32 percent from 3.38 percent late Thursday.
The dollar mostly fell against other major currencies, while gold prices fell.
Light, sweet crude rose 13 cents to settle at $66.02 per barrel on the New York Mercantile Exchange as tension mounted over Iran’s nuclear ambitions and Federal Reserve Chairman Ben Bernanke said he still supported a federal lending program that could press the dollar. Commodities are priced in U.S. dollars so they become more attractive to foreign buyers when the currency weakens.
Research in Motion fell $14.15, or 17 percent, to $68.91.
The Russell 2000 index of smaller companies fell 2.81, or 0.5 percent, to 598.94.
Overseas, Britain’s FTSE 100 rose 0.1 percent, Germany’s DAX index fell 0.4 percent, and France’s CAC-40 lost 0.5 percent. Japan’s Nikkei stock average fell 2.6 percent.