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http://www.theaustralian.news.com.au/business/story/0,28124,26127492-36418,00.html


Wall Street extends losses on weak economic

From correspondents in New York | September 26, 2009
Article from: Australian Associated Press

WALL Street shares fell for a third consecutive day on Friday as disappointing economic data prompted investors to retrench ahead of the weekend.

The Dow Jones Industrial Average slipped 42.25 points (0.44 per cent) to close at 9665.19 in a choppy session that saw modest swings in both directions. The drop left the blue chips down more than 1.5 per cent for the week.

The technology-heavy Nasdaq composite dropped 16.69 points (0.79 per cent) to 2090.92 and the Standard & Poor's 500 index shed 6.40 points (0.61 per cent) to 1044.38.

The market action came after the Commerce Department said orders for US durable goods fell 2.4 per cent, showing surprising weakness in the manufacturing sector.

The drop contrasted with market expectations of a 0.4 per cent increase. Manufacturing has been leading the US recovery from recession, although some analysts say this is largely due to rebuilding of factory inventories instead of growing consumer demand.

The durable goods drop "is not a major decline, yet the reaction is interesting since it speaks to the idea that the market is perhaps beginning to question its rose-coloured view of the immediate future'', said Patrick O'Hare at Briefing.com.

A separate report showed US new home sales edged higher in August by 0.7 per cent for a fifth consecutive monthly increase, although the gain was smaller than expected on Wall Street.

"This is a good news/bad news report. The good news is that inventory continues to come down,'' said Patrick Newport at IHS Global Insight.

Mr Newport said the bad news was that the report showed the median time a new home was on the market was a record 12.9 months.

"From a builder's perspective, the market for selling new homes is still brutal, despite the pickup in sales in recent months,'' he said.

A rise in the University of Michigan's consumer sentiment index to the highest level since January 2008 failed to spark any sustainable gains.

"Investors were disheartened by the morning's durable goods retrenchment, and were unconsoled by improving consumer confidence and new home sales,'' said Sara Kline at Moody's Economy.com.

Al Goldman at Wells Fargo Advisors said the market appears to be in a correction phase that can work off some of the excesses of a six-month rally of roughly 60 per cent for the broad market.

"A several-day pullback has begun. We believe it will be measured in days, not weeks, but it still must be respected after the 60 per cent rally from the March 9 lows,'' he said.

"The big picture is still a bull market which we believe will be higher by year-end.''

Among key stocks, Hewlett-Packard rose 0.32 per cent to $US47.02 ($54.31) after the computer giant said it expects the tech industry to return to growth in 2010.

Research in Motion meanwhile slid 17.05 per cent to $US68.91 after the Canadian-based maker of the BlackBerry smartphone reported a disappointing quarterly report that raised fears of slower growth.

Sara Lee lifted 6.36 per cent to $US11.21 after agreeing to sell its global body care and European detergents businesses to Anglo-Dutch group Unilever for €1.28 billion ($2.17 billion).

KB Homes slid 8.52 per cent to $US16.96 after the home builder posted quarterly results below most estimates and amid warnings of a slow recovery in the sector.

Bonds gained. The yield on the 10-year US Treasury bond eased to 3.329 per cent from 3.381 Thursday and that on the 30-year bond dropped to 4.093 per cent from 4.174 per cent.

Bond yields and prices move in opposite directions.