Stocks drifted lower Wednesday after an unexpected drop in home construction and disappointing forecasts from technology companies added to worries about the economic recovery.
NEW YORK (AP) — Stocks drifted lower Wednesday after an unexpected drop in home construction and disappointing forecasts from technology companies added to worries about the economic recovery.
The modest drop came a day after major stock indicators closed at 13-month highs. The Dow Jones industrial average slipped 11 points after having risen over nine of the past 11 days. Analysts say the market has been due for a break after the fast ascent.
John Brady, senior vice president of global interest rate products at MF Global in Chicago, said as the end of the year approaches traders are looking foremost at preserving the gains amassed in an eight-month rally which has given the benchmark Standard & Poor’s 500 index a gain of 22.9 percent so far in 2009.
“It’s a bit of a consolidation trade,” he said. “Traders are scared to go out too far out on a limb here and do anything too risky late in the year.”
The day’s economic news provided investors more reason for caution. The Commerce Department said construction of homes and apartments fell 10.6 percent in October to an annual rate of 529,000, well below the pace of 600,000 that economists polled by Thomson Reuters expected.
Joe Heider, president of Dawson Wealth Management in Cleveland, said the disappointing results “will push against what was a very bullish attitude on Wall Street.”
Heider said investors were trying to determine whether the slowdown signaled weakness in the economy or a reluctance among builders to break ground when the future of a homebuyers’ tax credit was uncertain. Lawmakers extended a tax credit for first-time homebuyers that was set to end this month through June.
Building permits, a key indication for future activity, slid 4 percent and fell short of forecasts.
Technology shares fell after BMO Capital Markets said Blackberry maker Research in Motion Ltd. faces increased competition as consumers opt for less expensive phones. Meanwhile, forecasts from software makers Autodesk Inc. and Salesforce.com fell short of analysts expectations.
According to preliminary calculations, Dow fell 11.11, or 0.1 percent, to 10,426.31. The broader S&P 500 index slipped 0.52, or 0.1 percent, to 1,109.80, while the technology-heavy Nasdaq composite index fell 10.64, or 0.5 percent, to 2,193.14.