The stock market is holding up, just not pressing ahead as the economic signs look a little less promising.
Stocks had their fourth straight day of incremental moves as traders ran down a new list of concerns: Commodity prices slumped on fears that demand will fall, orders for big-ticket manufactured goods dropped more than expected last month, and demand was weak at an auction for government debt.
The Dow Jones industrial average fell 26.00, or 0.3%, to 9,070.72. The broader Standard & Poor's 500 index fell 4.47, or 0.5%, to 975.15, while the Nasdaq composite index slid 7.75, or 0.4%, to 1,967.76.
Investors are uneasy but aren't giving up on stocks. The Dow lost only 26 points on Wednesday and major indexes are still up about 11% since only mid-July. Analysts say the market's buoyancy after such a big gain is a welcome sign of stability, but also that more good news is needed for stocks to resume their climb.
For now, though, investors are finding more reasons for concern. The price of oil and raw materials fell after stocks tumbled in China on fears that the growth in that country's economy would slow. That could hurt demand for a range of commodities. A jump in U.S. crude inventories further weighed on the price of oil.
The Commerce Department said orders to U.S. factories for manufactured goods — those expected to last at least three years — fell an unexpectedly steep 2.5% in June. The slide reflected troubles in the auto industry and a drop in demand for commercial aircraft. It was the largest decrease in five months, and was worse than the 0.6% decrease analysts were expecting.
Lackluster demand at a government debt auction for the consecutive second day fanned worries that rising interest rates could hobble a recovery in the economy. That boded poorly for a big auction of 7-year Treasury notes on Thursday.
Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore, cautioned against reading too much into any one economic number because he expects readings will continue to come in mixed as the economy begins to recover.
"There's a good economic number and then there's a bad number and that's probably what you'd expect at this juncture of the recession," he said. "Hopefully it's two steps back and three steps forward."
Traders are facing an intense seven-day run of economic data that will help shape views about how quickly the economy can pull out of the longest recession since World War II. On Thursday, weekly unemployment figures are due and a reading of the economy's overall output for the April-June quarter comes on Friday. Next week, reports are expected on manufacturing, housing, employment and the service industry.
Analysts say even some good numbers could bring out more buyers.
Meanwhile, the price of oil and raw materials fell after stocks tumbled in China on fears that the growth in the country's economy would slow. That could hurt demand for a range of commodities. A jump in U.S. crude inventories last week added to the unease.
On Tuesday, stocks finished mixed after several corporate earnings reports and the Conference Board's reading on consumer confidence fell short of expectations.
The yield on the benchmark 10-year Treasury, which moves opposite its price, rose to 3.70% from 3.69% late Tuesday.
Energy company stocks dragged on the overall market after crude inventories rose more than expected last week, according to a weekly Energy Department report. The rise prompted worries that weakness in the economy was curbing demand for energy.
Occidental Petroleum fell $2.21, or 3.1%, to $69.48, while Schlumberger fell $2.11, or 3.9%, to $54.60.
Light, sweet crude fell $3.88 to $63.35 a barrel on the New York Mercantile Exchange.
Energy and materials stocks began the day lower after a drop in stocks in China. The main Shanghai index tumbled 5% as reports suggested that China's two state-owned banks have been asked to limit their lending.
In corporate news, Microsoft and Yahoo.announced a 10-year deal that gives Microsoft access to the Internet's second-largest search engine audience. Microsoft rose 33 cents to $23.80, while Yahoo fell $2.08, or 12.08%, to $15.14.
Investors have grown cautious after a two-week surge of 11% 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.
Stocks were little changed after the Federal Reserve said that the economy is beginning to show signs of stabilizing in some parts of the country, bolstering hopes of a broader-based recovery this year.
The central bank's snapshot of economic conditions found that most of the Fed's 12 regions indicated either that the recession was easing or that economic activity had "begun to stabilize, albeit at a low level."
About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 667.8 million shares compared with 746.7 million traded at the same point Tuesday.
The Russell 2000 index of smaller companies fell 3.57, or 0.6%, to 548.39.
The dollar was mixed against other major currencies, while gold prices fell.
Overseas, Japan's Nikkei stock average rose 0.3%. Britain's FTSE 100 rose 0.4%, Germany's DAX index rose 1.9%, and France's CAC-40 advanced 1%.