The latest durable goods report is giving the stock market new reasons for worrying about the economic recovery.
Stocks fell moderately early Wednesday after the Commerce Department said orders to U.S. factories for big-ticket manufactured goods dropped an unexpectedly steep 2.5 percent in June, the latest sign that the economy could remain troubled for some time. The market’s July rally has been on hold since Friday as investors look for clues about the economy’s direction.
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The drop in orders reflected the continuing troubles in the auto industry and a sharp drop in demand for commercial aircraft. It was the largest slide in five months. Economists were expecting a decrease of 0.6 percent.
The markets appeared unmoved by an Internet search deal announced Wednesday between Microsoft Corp. and Yahoo Inc.
In midmorning trading, Dow Jones industrial average fell 11.41, or 0.1 percent, to 9,085.31. The Standard & Poor’s 500 index fell 3.10, or 0.3 percent, to 976.52, while the Nasdaq composite index slid 8.32, or 0.4 percent, to 1,967.19.
On Tuesday, stocks finished mixed after several corporate earnings reports and the Conference Board’s reading on consumer confidence fell short of expectations.
In corporate news, media conglomerate Time Warner Inc. said its second-quarter profit fell 34 percent on lower revenue in the company’s publishing, movie and online properties. Its earnings topped estimates but revenue fell short of projections.
Sprint Nextel Corp. said its loss widened in the second quarter as revenue and subscribers continued to decline.
Investors have grown cautious after a two-week surge of 11 percent in major stock indexes that began when earnings reports were stronger than expected. A handful of disappointing earnings reports earlier in the week reminded investors that an economic recovery may still be far off.
The market will be looking for insights into the economy when the Federal Reserve releases its beige book report at 2 p.m. EDT (1800 GMT). The report is a regional snapshot of economic activity.
About two stocks fell for every one that fell on the New York Stock Exchange, where volume came to 152.5 million shares compared with 160.2 million traded at the same point Tuesday.
The Russell 2000 index of smaller companies fell 2.94, or 0.5 percent, to 549.01.
Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.64 percent from 3.69 percent late Tuesday.
