Stocks decline in early trading amid mixed earnings, disappointing durable goods report

Stocks fall on economy worries

Stocks are falling in early trading Wednesday as investors grow increasingly wary about the economic recovery.

A new report on U.S. factory orders was the latest in a sign that the economy may not rebound as fast as hoped.

The stock market’s two-week market rally is on hold after earnings reports and the Conference Board’s reading on consumer confidence fell short of expectations.

Amid investors’ growing caution, the markets appeared unmoved by the Internet search deal announced Wednesday between Microsoft Corp. and Yahoo Inc. Traders brushed off gains in overseas markets, which rose on generally positive earnings from leading industrial companies.

The Commerce Department says orders to U.S. factories for big-ticket manufactured goods dropped an unexpectedly steep 2.5 percent in June, reflecting the continuing troubles in the auto industry and a steep drop in demand for commercial aircraft. It was the largest drop in five months. Economists were expecting a drop of 0.6 percent.

In early morning trading, Dow Jones industrial average fell 67.72, or 0.7 percent, at 9,029.00. The Standard & Poor’s 500 index is down 9.21, or 0.9 percent, at 970.41, while the Nasdaq composite index is down 18.20, or 0.9 percent, at 1957.31.

In one of the day’s first earnings reports, media conglomerate Time Warner Inc. said its second-quarter profit fell 34 percent on lower revenue in the company’s publishing, movie and online properties. Its earnings topped estimates but revenue fell short of projections.

Sprint Nextel Corp. joined in with disappointing news. The nation’s third-largest wireless provider said its loss widened in the second quarter as revenue and subscribers continued to decline.

Investors have decided to put their two-week market rally that began with strong earnings and economic news on hold. After such a huge advance that saw major indexes climb more than 11 percent, the market has gotten more cautious.

A handful of disappointing earnings reports earlier in the week reminded investors that an economic recovery may not come as fast as hoped.

The Federal Reserve releases its beige book report at 2 p.m. EDT. The report is a regional snapshot of economic activity.

Investors are also awaiting earnings reports from companies including oil producer ConocoPhillips Co. and credit and debit card company Visa Inc.

Later in the week, companies including Walt Disney Co., Exxon Mobil Corp., Colgate-Palmolive Co. and Dow Chemical Co. are scheduled to report second-quarter results.