Stocks fell on Friday as investors wrestled with disappointing data on durable goods orders and housing, while Research In Motion's lackluster results dented recent optimism about technology spending.
Economic reports showed that new orders for long-lasting U.S. manufactured goods fell by their biggest margin in seven months, while August sales of new home sales fell short of Wall Street's expectations, raising questions about the strength of the recovery.
With the benchmark S&P 500 having risen almost 60 percent from 12-year lows of early March, the tolerance threshold of less-than-stellar economic data has diminished as investors seek justification for the strong equity run-up.
Shares of Research In Motion
We need to see some data points that are leading us in the right direction, said David Dietze, chief investment officer of Point View Financial Services in Summit, New Jersey.
The data on the health of the residential market and durable goods do not support a quick recovery thesis.
The Dow Jones industrial average <.DJI> dropped 21.39 points, or 0.22 percent, to 9,686.05. The Standard & Poor's 500 Index <.SPX> fell 3.84 points, or 0.37 percent, to 1,046.94. The Nasdaq Composite Index <.IXIC> shed 13.08 points, or 0.62 percent, to 2,094.53.
Economically sensitive stocks bore the brunt of the sell-off, including big manufacturers, banks, home builders and consumer discretionaries.
But a rise in shares of companies which fare better in an uncertain economy, including Coca-Cola Co
Wal-Mart Stores Inc
Shares of credit card company American Express Co
Homebuilder KB Home
The Dow Jones home construction index <.DJUSHB> declined 2.6 percent.
Stocks have rallied sharply for six months on expectations that the recovery was gaining traction.
But besides worrying about the extent of recovery, the market's other worry now is that authorities might curb stimulus measures too soon after the Federal Reserve said on Wednesday it would slow one of its key programs to stabilize mortgage lending.
World leaders at the Group of 20 nations summit pledged to keep emergency economic supports in place until a robust recovery takes hold.
(Editing by Kenneth Barry)