Sept. 25 (Bloomberg) -- U.S. stocks fell, extending the market’s biggest weekly drop since July, as lower-than-estimated data on durable goods orders and home sales overshadowed improving in consumer confidence. Oil rose for the first time in three days; Treasury two-year notes fell the most in a week.
General Electric Co.,Alcoa Inc. and American Express Co. lost at least 1.3 percent after the Commerce Department reported a 2.4 percent slide in bookings for goods meant to last several years. Research In Motion Ltd., maker of the BlackBerry, tumbled 17 percent after its sales forecast trailed analysts’ estimates. Bank of America Corp. and Citigroup Inc. retreated after Federal Deposit Insurance Corp. Chairman Sheila Bair urged policies to end bailouts for large banks.
“Mixed economic reports not just today, but during the entire week,” said Philip Orlando, who helps oversee $400 billion as chief equity market strategist at Federated Investors Inc. in New York. “That tells us that the economy is not a straight shot to the moon. Same goes for the stock market.”
The Standard & Poor’s 500 Index fell 0.6 percent to 1,044.38 at 4:05 p.m. in New York. The Dow Jones Industrial Average dropped 42.25 points, or 0.4 percent, to 9,665.19. The Nasdaq Composite Index slipped 0.8 percent to 2,090.92.
Equities opened lower as the Commerce Department report on orders for durable goods spurred concern the economy is struggling to recover. Benchmark indexes rebounded briefly after the Reuters/University of Michigan final index of consumer confidence for September rose to 73.5, higher than economists’ estimate of 70.5. New home sales climbed 0.7 percent, less than the 1.6 percent estimate of economists.
Weekly Decline
The S&P 500 lost 2.2 percent this week, its biggest drop since the beginning of July, as sales of existing homes unexpectedly slumped and the Federal Reserve said it will cut the size of two programs meant to bolster credit markets.
Traders said the moves in stocks were exaggerated by relatively light trading in anticipation to the Yom Kippur holiday on Sept. 28. About 1.19 billion shares traded on the New York Stock Exchange, a 47 percent drop from a week earlier.
“There’s the Jewish holiday on Monday and a bit of short covering going into the long weekend,” said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages about $2 billion in San Antonio.
A 54 percent rally since March 9 left the S&P 500 valued at 20 times the reported earnings from continuing operations of its companies, the most expensive level since 2004, according to weekly data compiled by Bloomberg.
‘In a Recovery’
“We are in a recovery,” said E. William Stone, who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “Valuation-wise, stocks may not be as cheap as they were six months ago. But if we get a better-than-expected recovery, stocks may be very attractive, especially relative to other alternatives.”
Crude oil for November delivery rose 13 cents to $66.02 a barrel in New York after President Obama said Iran, the world’s fourth-biggest oil producer, is building a new nuclear fuel plant and is “breaking rules” that other nations follow. Futures touched $65.05 earlier today, the lowest intraday price since July 31.
The two-year Treasury note fell, sending its yield up five basis points to 0.98, as the bigger-than-estimated gain in consumer confidence added to evidence the economy is recovering from the worst recession in seven decades.
Yield Spread
The difference in yields between two- and 10-year notes narrowed for a fourth day to 2.34 percentage points. The so- called yield curve is the flattest since May 18.
The yen rose beyond 90 versus the dollar for the first time in seven months as Japan’s Finance Minister Hirohisa Fujii reiterated opposition to intervention in currency markets. The dollar traded at $1.4677 per euro, compared with $1.4666 yesterday.
The Dollar Index, which gauges the currency against six major trading partners, fell as much as 0.5 percent today, the third decline in four sessions.
Copper prices rose after a drop in the dollar boosted the metal’s appeal as a hedge against inflation.
Gold fell, capping the biggest weekly decline since mid- July, as the metal’s failure to reach a record discouraged investors who had bet on a longer rally.
Precious Metals
Gold traded below $1,000 for the second straight day after climbing to $1,025.80 on Sept. 17, near the all-time high of $1,033.90 set in March 2008.
Silver sank the most in a week since February. Before today, silver surged 44 percent and gold rose 13 percent this year, heading for a ninth-straight annual gain.
Major U.S. equity indexes are poised to fall at least 10 percent after experiencing a “key reversal” by closing lower on the day they rose to nearly one-year highs, according to Chicago-based Technical Analytics Inc. The S&P 500, the Dow and the Nasdaq have fallen for three straight days since setting the intraday highs on Sept. 23.
U.S. stocks are two-thirds of the way through a “structural bear market” and will take at least four years to surpass their record levels of October 2007, technical analyst Louise Yamada said.
The stock market is likely to alternate between cyclical, or shorter-term, bull and bear markets over that period, Yamada, managing director of Louise Yamada Technical Research Advisors LLC in New York, said in a Bloomberg Radio interview.
“The profile of the next four years is about eight cyclical moves,” Yamada said. The S&P 500’s 12-year low in March “may well prove to be the pivot low, but that doesn’t mean we’re going to be roaring off in a new bull market yet. There’s a lot of repair that has to take place following that kind of a decline.”
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