Investors look past sharp rise in sales of existing homes; Amazon, Microsoft buck slide

Big jump in home sales fails to lift stock market

NEW YORK — Investors looked past a sharp rise in home sales and strong profits at key technology companies, sending stocks lower as disappointing forecasts from major railroads stirred unease about the economy.

The decline in late morning trading Friday came as traders found little reason to buy into the market after a strong rally on Thursday.

A huge jump in sales of existing homes last month was seen as an aberration. The National Association of Realtors said that sales rose 9.4 percent, nearly double the advance that had been expected. It was the highest level in more than two years as buyers raced to complete purchases before a tax credit expires at the end of November.

Profits at Amazon.com and Microsoft sailed past expectations and drew some buyers to tech stocks.

Cautious comments from the leaders of major railroad companies were a cause for worry. Union Pacific chairman and CEO Jim Young said Thursday that he expects the economy to “limp along” until unemployment starts to fall. Burlington Northern also issued a tepid forecast after the end of trading Thursday.

Union Pacific said its profit was off 26 percent, while revenue fell 24 percent. Burlington reported a 30 percent drop in third-quarter earnings, while revenue fell 27 percent.

Railroads are often seen as a good early indicator of economic activity because of their role in shipping resources and goods to manufacturers and markets.

Linda Duessel, equity market strategist at Federated Investors, said the drop in stocks wasn’t worrisome and that a break is needed from the surge of the past seven months.

“The run-up has been too fast,” she said. “You need to consolidate.”

In late morning trading, the Dow Jones industrial average fell 79.81, or 0.8 percent, to 10,001.50. The broader Standard & Poor’s 500 index fell 9.50, or 0.9 percent, to 1,083.41. The Nasdaq composite index slipped 2.56, or 0.1 percent, to 2,162.73.

Stocks posted big gains Thursday, sending the Dow up 132 points. Investors snapped up financial shares after several banks said they weren’t seeing as many loans go bad. The market also extended its gains after Wal-Mart Stores Inc. said it expects sales to grow this year and increase at a faster pace next year.

Bond prices fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.47 percent from 3.42 percent late Thursday.

The dollar was mixed against other major currencies, while gold prices rose.

Crude oil fell 86 cents to $80.33 per barrel on the New York Mercantile Exchange.

Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 388.3 million shares compared with 422.4 million shares traded at the same point Thursday.

Overseas, Japan’s Nikkei stock average rose 0.2 percent. In afternoon trading, Britain’s FTSE 100 climbed 0.9 percent, Germany’s DAX index slipped less than 0.1 percent and France’s CAC-40 rose 0.1 percent.