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Stocks higher in opening moments of trading

October 24, 2009|Associated Press

NEW YORK — Stocks retreated Friday as cautious forecasts from railroad companies caused unease about the economy, offsetting some more better-than-expected earnings reports.

Shares of energy and raw-material producers led the way down as a rising dollar helped depress commodity prices.

The Dow Jones industrial average fell 109 points, slipping below 10,000 points and ending the week with a modest loss.

Traders appeared eager to collect profits after strong earnings pushed stock indexes up more than 6% in the three weeks leading into Friday.

The Standard & Poor's 500 index is up 60% since March, though it's still down 31% from its peak two years ago.

"We've had such a great run that you're going to get people taking money off the table, especially at the end of the week," said Bob Froehlich, senior managing director at Hartford Financial Services.

Friday's drop came despite some good news. The National Assn. of Realtors reported that sales of existing homes surged 9.4% last month, nearly double the increase analysts had expected.

But the gain was widely seen as an aberration because the imminent expiration of a tax credit for home buyers has caused a rush of purchases.

Shares of soared 27% to a record close after the Seattle-based Internet retailer's third-quarter earnings came in late Thursday much stronger than expected. And Microsoft jumped 5.4% after the Redmond, Wash.-based software maker's earnings topped analyst estimates.

But Broadcom slumped 7.3% after the Irvine chip maker late Thursday posted a 49% drop in net income and projected no change in revenue in the fourth quarter from the third.

"There's a little concern about whether Santa's coming this year or not," Broadcom Chief Executive Scott A. McGregor said during a conference call.

In the railroad sector, considered a leading indicator for the overall economy, Union Pacific's CEO said the economy would "limp along" until unemployment starts to fall. Burlington Northern also issued a tepid forecast. Union Pacific slid 5.6%, while Burlington Northern lost 6.5%.

The Dow fell 109.13 points, or 1.1%, to 9,972.18. The S&P 500 index dropped 13.31 points, or 1.2%, to 1,079.60. The tech-dominated Nasdaq composite index fell less sharply -- dropping 10.82 points, or 0.5%, to 2,154.47 -- as the Amazon and Microsoft news helped limit losses.

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

Oil futures fell 69 cents to $80.50 a barrel in New York .

For the week, the Dow dropped 0.2%, the S&P 500 fell 0.7% and the Nasdaq edged down 0.1%.

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