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Stocks fall in early trading

July 30, 2009|Associated Press

NEW YORK — The stock market is holding up, just not pressing ahead as the economic signs look a little less promising.

Stocks had their fourth straight day of minimal moves Wednesday as commodity prices slid and orders for big-ticket manufactured goods fell, injecting more uncertainty into the market.

Investors are uneasy but aren't giving up on stocks. The Dow Jones industrial average lost only 26 points Wednesday, and major indexes are still up about 11% since mid-July. Analysts say the market's buoyancy after such a big gain is a sign of stability, but also that more good news is needed for stocks to resume their climb.

For now, though, investors are finding more reasons for concern. The price of oil and other commodities declined for a third day after stocks tumbled 5% in China on fears that growth in that country would slow. That could hurt demand for a variety of commodities.

The Commerce Department said orders to U.S. factories for manufactured goods -- those expected to last at least three years -- fell an unexpectedly steep 2.5% in June. The slide reflected troubles in the auto industry and a drop in demand for commercial aircraft. It was the largest drop in five months and was worse than the 0.6% analysts expected.

Lackluster demand at a government debt auction for the second straight day fanned worries that rising interest rates could hobble a recovery. That boded poorly for a big auction of seven-year Treasury notes today.

Traders are facing an intense seven-day run of economic data that will help shape views about how quickly the U.S. can pull out of the longest recession since World War II.

Weekly unemployment-benefit claims figures are due today, and a reading of gross domestic product for the second quarter comes out Friday. Next week reports are due on manufacturing, housing, employment and the service industry.

Manny Weintraub, president of Integre Advisors in New York, said some good numbers could bring out more buyers because investors were betting on what the economy would look like in the coming months, not what it looks like now.

"As long as things are getting better, the market can go up," Weintraub said.

The Dow fell 26.00 points, or 0.3%, to 9,070.72. It also fell Tuesday after a weak reading on consumer confidence. The two-day drop was the first in more than a month for the Dow, which is on pace to record its best July in 20 years.

The broader Standard & Poor's 500 index fell 4.47 points, or 0.5%, to 975.15, while the Nasdaq composite slid 7.75 points, or 0.4%, to 1,967.76.

Three stocks fell for every two that rose on the New York Stock Exchange.

The Russell 2000 index of smaller companies fell 3.57 points, or 0.7%, to 548.38.

Some investors were rattled after U.S. crude oil inventories rose more than expected last week. The rise prompted worries that weakness in the economy was curbing demand for energy.

Near-term oil futures in New York slid $3.88 to settle at $63.35 a barrel.

Occidental Petroleum fell $2.21, or 3.1%, to $69.48, while oil field service company Schlumberger dropped $2.11, or 3.9%, to $52.49.

Bonds were mixed after the Treasury's auction of a record $39 billion in new five-year T-notes saw weaker-than-expected investor bidding. The five-year notes paid an annualized yield of 2.69%, compared with the 2.635% that was expected.

An auction of two-year T-notes on Tuesday also saw relatively weak demand. The yield on those notes surged to 1.16% Wednesday from 1.08% on Tuesday.

But longer-term bond yields were flat or slightly lower. The 10-year T-note eased to 3.66% from 3.69% Tuesday.

Overseas, Britain's FTSE 100 rose 0.4%, Germany's DAX index rose 1.9% and France's CAC-40 advanced 1%. Japan's Nikkei stock average rose 0.3%.

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