New York — The Associated Press Published on Friday, Oct. 23, 2009 7:27AM EDT Last updated on Friday, Oct. 23, 2009 11:29AM EDT
Investors looked past a jump in home sales and strong profits at key technology companies as disappointing forecasts from major railroads stirred unease about the economy.
Stocks zigzagged early Friday as investors 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 per cent, 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 (AMZN-Q115.3721.9223.46%) and Microsoft (MSFT-Q28.381.796.73%) 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 (UNP-N57.29-3.83-6.27%) chairman and CEO Jim Young said Thursday that he expects the economy to “limp along” until unemployment starts to fall. Burlington Northern (BNI-N79.27-5.35-6.32%) also issued a tepid forecast after the end of trading Thursday.
Union Pacific said its profit was off 26 per cent, while revenue fell 24 per cent. Burlington reported a 30-per-cent drop in third-quarter earnings, while revenue fell 27 per cent.
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.
In midmorning trading, the Dow Jones industrial average (DJIA-I10,005.58-75.73-0.75%) fell 48.29, or 0.5 per cent, to 10,033.02. The broader Standard & Poor's 500 index (SPX-I1,083.59-9.32-0.85%) fell 5.84, or 0.5 per cent, to 1,087.07. The Nasdaq composite index (COMP-I2,164.62-0.67-0.03%) rose 6.43, or 0.3 per cent, to 2,171.72.
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