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Stocks higher at open after jobs data

September 25, 2009|Associated Press

NEW YORK — Stocks fell for a second day Thursday after an unexpected drop in home sales and a slide in oil prices fanned worries about the pace of the economy's recovery.

The National Assn. of Realtors said sales of existing homes fell 2.7% in August after jumping 7.2% in July. Economists had expected sales would post their fifth straight monthly increase.

The market climbed in morning trading after a surprise drop in the number of people seeking unemployment benefits for the first time. The housing numbers upended that advance, however, and stocks never recovered.

The Dow Jones industrial average ended with a loss of 41 points, bringing its two-day decline to 122 points.

A stronger dollar weighed on the market by helping to push commodity prices lower. That hit stocks of energy and materials companies.

Technology shares could face pressure today after disappointing quarterly results from BlackBerry maker Research in Motion. The company warned that revenue for the current quarter would fall short of analysts' expectations. The stock fell 9% in after-hours trading.

The market's retreat Thursday came a day after investors looked past a relatively upbeat assessment of the economy from the Federal Reserve and worried about what would happen once the government starts to wind down its economic stimulus efforts.

The Fed said Wednesday that it would slow its purchases of mortgage-backed securities to extend the program into early next year. A tax credit for first-time home buyers is set to expire Nov. 30. And Thursday the Fed said it would trim two emergency lending programs.

"We know what the data looked like with the economy on life support," said Stephen Wood, chief market strategist at Russell Investments. "What the market is beginning to price is what will the data look like when the Fed starts withdrawing that life support, and that is not nearly as clear."

Investors are also questioning how much further the stock market can climb in the short term. The Standard & Poor's 500 index has jumped 55% since hitting a 12-year low March 9. Other indexes are also up sharply, and the climb has come with few pauses. Many market watchers see unbroken gains as a worrisome sign of indiscriminate buying.

The Dow fell 41.11 points, or 0.4%, to 9,707.44. The S&P 500 index slid 10.09 points, or 1%, to 1,050.78, and the Nasdaq composite index slumped 23.81 points, or 1.1%, to 2,107.61.

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

Oil futures sank $3.08, or 4.4%, to $65.89 a barrel after a nearly 4% slide Wednesday.

Gold ended below $1,000 for the first time in two weeks. Silver also posted a big drop.

Government bond yields fell along with stocks. The benchmark 10-year Treasury note sank to 3.38% from 3.41% late Wednesday.

Overseas, key stock indexes lost 1.2% in Britain and 1.7% in Germany and France. Japanese stocks rose 1.7% after a three-day holiday.

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