Stocks fall on jitters about pace of recovery in economy; pause in rally extends to fourth day

Stocks slip as fears remain about pace of recovery

NEW YORK — The stock market is holding up, just not pressing ahead as the economic signs look a little less promising.

Stocks had their fourth straight day of minimal moves Wednesday as commodity prices slid and orders for big-ticket manufactured goods fell, injecting more uncertainty into the market.

Investors are uneasy but aren’t giving up on stocks. The Dow Jones industrials lost only 26 points on Wednesday and major indexes are still up about 11 percent since mid-July. Analysts say the market’s buoyancy after such a big gain is a welcome sign of stability, but also that more good news is needed for stocks to resume their climb.

For now, though, investors are finding more reasons for concern. The price of oil and other commodities fell for a third day after stocks tumbled in China on fears that growth in that country would slow. That could hurt demand for a range of commodities.

The Commerce Department said orders to U.S. factories for manufactured goods — those expected to last at least three years — fell an unexpectedly steep 2.5 percent in June. The slide reflected troubles in the auto industry and a drop in demand for commercial aircraft. It was the largest drop in five months, and was worse than the 0.6 percent analysts expected.

Lackluster demand at a government debt auction for the second straight day fanned worries that rising interest rates could hobble a recovery. That boded poorly for a big auction of 7-year Treasury notes on Thursday.

Traders are facing an intense seven-day run of economic reports that will help shape views about how quickly the United States can pull out of the longest recession since World War II. On Thursday, weekly unemployment figures are due and a reading of gross domestic product for the April-June quarter comes on Friday. Next week, reports are expected on manufacturing, housing, employment and the service industry.

Manny Weintraub, president of Integre Advisors in New York, said some good numbers could bring out more buyers because investors are betting on what the economy will look like in the coming months, not what it looks like now.

“As long as things are getting better the market can go up,” Weintraub said.

The Dow fell 26.00, or 0.3 percent, to 9,070.72. The Dow also fell Tuesday after a weak reading on consumer confidence. The two-day drop was the first for the Dow in more than a month. The average is on pace to record its best July in 20 years.

The broader Standard & Poor’s 500 index fell 4.47, or 0.5 percent, to 975.15, while the Nasdaq composite index slid 7.75, or 0.4 percent, to 1,967.76.

Energy and materials stocks fell after China’s benchmark Shanghai Composite Index dropped 5 percent on worries that authorities might try to keep the country’s economy from growing too quickly. A slowdown in China’s economy would erode demand for a range of resources.

Investors were also unnerved after U.S. crude inventories rose more than expected last week. The rise prompted worries that weakness in the economy was curbing demand for energy.

Occidental Petroleum Corp. fell $2.21, or 3.1 percent, to $69.48, while Schlumberger Ltd. fell $2.11, or 3.9 percent, to $52.49.

Light, sweet crude slid $3.88 to settle at $63.35 a barrel on the New York Mercantile Exchange.

Bond prices were mixed after a disappointing auction of five-year notes. That raised fears that Washington will have to offer investors higher returns on debt, which can drive up borrowing costs on consumer loans like mortgages. The yield on the benchmark 10-year Treasury, which moves opposite its price, fell to 3.67 percent from 3.69 percent late Tuesday.

Investors took some comfort from a Federal Reserve report that found the economy is seeing early signs of stabilizing in some parts of the country. That comes as traders have been cautious following the surge in stocks that began July 13 when corporate earnings reports started coming in stronger than expected.

In corporate news, Microsoft Corp. and Yahoo Inc. announced a 10-year deal that gives Microsoft access to the Internet’s second-largest search engine audience. Microsoft rose 33 cents to $23.80, while Yahoo fell $2.08, or 12.1 percent, to $15.14.

Three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume came to 5.4 billion shares compared with 5.6 billion Tuesday.

The Russell 2000 index of smaller companies fell 3.57, or 0.7 percent, to 548.38.

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

Overseas, Britain’s FTSE 100 rose 0.4 percent, Germany’s DAX index rose 1.9 percent, and France’s CAC-40 advanced 1 percent. Japan’s Nikkei stock average rose 0.3 percent.