Stocks zigzag after economic reports disappoint

US stocks trade mixed after durable goods orders, new home sales lag behind expectations

• By Stephen Bernard and Tim Paradis, AP Business Writers
• On 12:27 pm EDT, Friday September 25, 2009

NEW YORK (AP) -- Stocks seesawed in a tight range Friday after disapppointing reports on durable goods orders and new home sales further dampened enthusiasm about the state of the economy.

Durable goods orders, a key indicator for the manufacturing industry, fell unexpectedly in August. It was the second drop in three months and the latest sign that any rebound in manufacturing is likely to be slow.

The Commerce Department said orders for goods expected to last at least three years fell 2.4 percent, after increasing 4.8 percent in July. Economists polled by Thomson Reuters had forecast an increase of 0.5 percent.

Meanwhile, the Commerce Department also reported that new home sales inched up to 429,000 last month from 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000.

Disappointing quarterly results from BlackBerry maker Research In Motion Ltd. are weighing on the tech-heavy Nasdaq composite index.

Traders are also watching a meeting of leaders from the world's 20 largest economies in Pittsburgh for indications of how those governments plan to bring about a strong, sustainable recovery.

Stocks fell Thursday following disappointing reports on existing home sales and drops in commodity prices, which hurt materials and industrial stocks. The market also slid on Wednesday on worries that the Federal Reserve would be too quick to withdraw its financial supports from the economy.

With major indicators like the Standard & Poor's 500 index up 55.3 percent from a 12-year low in March, market analysts have been saying that a break in the advance is necessary.

"We had a market that got considerably overbought," said Steven Goldman, chief market strategist, Weeden & Co. in Greenwich, Connecticut. "We still think things should stay relatively orderly in the pullback and we're still likely to see further gains."

In midday trading, the Dow Jones industrial average fell 21.09, or 0.2 percent, to 9,686.35.

The broader Standard & Poor's 500 index fell 3.61, or 0.3 percent, to 1,047.17, and the Nasdaq fell 11.96, or 0.6 percent, to 2,095.65.

Four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 426.6 million shares compared with 536.3 million shares traded at the same point Thursday.

Investors looked past an improvement in the Reuters/University of Michigan consumer sentiment index, which rose to 73.5 in September from 65.7 in August. The index stands at the highest level since the start of 2008. That's a welcome sign because more upbeat consumers could be more likely to spend. That could help the economy recover.

Meanwhile, bond prices traded mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.33 percent from 3.38 percent late Thursday.

The dollar mostly fell against other major currencies, while gold prices fell.

Research in Motion fell $13.04, or 15.7 percent, to $70.02.

The Russell 2000 index of smaller companies fell 3.19, or 0.5 percent, to 598.56.

Buzz up!