US stocks fall after poor durable figures
US stocks fell yesterday after weak durable goods figures and a downbeat assessment of the economy from the Fed’s Beige Book kept the benchmark S&P 500 trapped below its 200-day moving average.
A three-day rally built on strong earnings boosted the index to close Monday above its 200-day moving average, a closely watched measure of market direction. It has since stalled as trading remains rangebound and technically driven.
“In the short run technicals are dominating daily movements here until we get a fundamental (piece of news) to knock us off that,” said Jim Paulsen, chief investment officer at Wells Capital Management.
Boeing disappointed investors after it forecast full-year earnings slightly below estimates. The plane maker’s shares fell 1.9 per cent to $67.32.
The US Federal Reserve’s Beige Book, a summary of national economic conditions, added to the disappointment. It indicated activity was not as robust in a few districts and had lost steam over the past several weeks.
“With the nice rally that we had, it looks like some profit-takers are starting to take charge here and the Beige Book sparked it,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, Ohio.
“Earnings have been good, but the overall economy is still sluggish at best and is not coming back as much as we would have hoped,” he said.
The S&P’s 200-day moving average is currently around 1,114. Investors are struggling to either define it as the top of a recent rally or a consolidation point leading to further gains.Paulsen said holding above 1,100 could set the S&P for a run at the 1,150 level if fundamentals are supportive. Some investors are wary of committing ahead of a report on weekly jobless claims and US economic growth later this week, he said.
The Dow Jones industrial average dropped 39.81 points, or 0.38 per cent, to 10,497.88. The Standard & Poor’s 500 Index dropped 7.72 points, or 0.69 per cent, to 1,106.12. The Nasdaq Composite Index dropped 23.69 points, or 1.04 per cent, to 2,264.56.