Stocks fall further after Fed regional economic report says recovery slows in some parts of US

Stocks fall further after Fed economic report

NEW YORK — Two reports that showed the recovery is slowing sent stocks moderately lower.

The Federal Reserve, in its regional survey of the economy known as the “beige book,” said Wednesday that growth has been steady during the summer in Cleveland and Kansas City but slowed in Atlanta and Chicago. It said manufacturing slowed or leveled off in about half its 12 regions.

Investors weren’t surprised, but they also didn’t like hearing another downbeat assessment of the economy. The Fed report followed news that durable goods orders fell during June.

The Dow Jones industrial average ended a four-day winning streak and closed down 39, or 0.4 percent, at 10,497. The Standard & Poor’s 500 index fell 7, or 0.7 percent, to 1,106. The Nasdaq composite index fell 23, or 1 percent, to 2,264.

Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1 billion shares.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stocks fell moderately Wednesday after the Federal Reserve said the economic recovery is slowing in some parts of the country.

The Dow Jones industrial average, down about 14 points before the report came out, fell to a loss of 71. Broader market indexes also fell.

In its regional survey of the economy known as the “beige book,” the Fed said economic growth has been steady during the summer in Cleveland and Kansas City, but has slowed in Atlanta and Chicago. The central bank described economic activity elsewhere as modest.

The Fed report had some sobering news about manufacturing, which had been one of the strongest parts of the economy. While manufacturing expanded in most of the Fed’s 12 regions, about half — New York, Cleveland, Kansas City, Chicago, Atlanta and Richmond — said manufacturing had “slowed” or “leveled off.”

Investors weren’t surprised by the Fed report, but they also didn’t like hearing their own downbeat assessment of the economy confirmed by the central bank.

“It does reiterate that the economy is not bouncing back as much as we would hope,” Ryan Detrick, senior technical strategist chairman of Schaeffer’s Investment Research, said of the beige book.

But Detrick also said the report gave investors an excuse to cash in some of their gains from the market’s rally late last week and early this week.

The Fed assessment followed a disappointing Commerce Department durable goods orders report early in the day. Orders for durable goods, which are expected to last at least three years, fell 1 percent in June. Economists expected a 1 percent gain.

Investors have been trying in recent weeks to balance strong earnings and corporate outlooks with economic data that isn’t as encouraging. A larger-than-expected drop in consumer confidence Tuesday helped push stocks mostly lower although another batch of robust earnings reports came out.

David Hefty, CEO of Cornerstone Wealth Management, said many investors are waiting for the government’s report on gross domestic product, the broadest measure of how the economy is doing, before making any big investing moves.

The Dow fell 71.22, or 0.7 percent, to 10,466.47. The Standard & Poor’s 500 index fell 10.17, or 0.9 percent, to 1,103.67, while the Nasdaq composite index fell 30.23, or 1.3 percent, to 2,258.02.

Five stocks fell for every two that rose on the New York Stock Exchange, where volume came to 657 million shares.

Volume has been light even by summer standards, which has added to the day-to-day volatility.

Treasury prices, which get a boost from bad economic news, rose after the beige book was released. That sent interest rates lower. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3 percent from 3.05 percent compared with late Tuesday. That yield helps set interest rates on mortgages and other consumer loans.

Earnings reports were mixed Wednesday, which contributed to a muted tone in the stock market. Boeing Co. said its profit slipped from a year ago, but results still topped expectations. The airplane maker also didn’t adjust its outlook.

Sprint Nextel Corp. said it added subscribers to its network for the first time in three years during the second quarter as it improves customer service and retention. Its revenue slightly topped forecasts.

ConocoPhillips profit more than doubled as refining margins improved and oil prices rose.

Sprint Nextel rose 3 cents to $4.86. ConocoPhillips was unchanged at $54.44. Boeing fell $1.56 to $67.06.

The Dow’s four-day winning streak is in jeopardy. It eked out a 12 point advance Tuesday thanks to strong earnings from chemical maker DuPont Co., a component of the index. Broader indicators all dipped after another disappointing report showed consumer confidence is weakening.

Overseas, Britain’s FTSE 100 fell 0.9 percent, Germany’s DAX index dropped 0.5 percent, and France’s CAC-40 rose 0.1 percent. Japan’s Nikkei stock average jumped 2.7 percent.