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Wall Street extends losses on weak economic data

 A businessman walks past an electric board showing the Nikkei 225 stock index in Tokyo, Monday, Aug. 10, 2009. Tokyo stocks rose sharply on Monday fo...

Japan Markets

A businessman walks past an electric board showing the Nikkei 225 stock index in Tokyo, Monday, Aug. 10, 2009. Tokyo stocks rose sharply on Monday fo...

Wall Street shares fell for a third consecutive day Friday as disappointing economic data prompted investors to retrench ahead of the weekend.
The Dow Jones Industrial Average slipped 42.25 points (0.44 percent) to close at 9,665.19 in a choppy session that saw modest swings in both directions. The drop left the blue chips down more than 1.5 percent for the week.
The technology-heavy Nasdaq composite dropped 16.69 points (0.79 percent) to 2,090.92 and the Standard & Poor's 500 index shed 6.40 points (0.61 percent) to 1,044.38.
The market action came after the Commerce Department said orders for U.S. durable goods fell 2.4 percent, showing surprising weakness in the manufacturing sector.
The drop contrasted with market expectations of a 0.4 percent increase. Manufacturing has been leading the U.S. recovery from recession, although some analysts say this is largely due to rebuilding of factory inventories instead of growing consumer demand.
The durable goods drop "is not a major decline, yet the reaction is interesting since it speaks to the idea that the market is perhaps beginning to question its rose-colored view of the immediate future," said Patrick O'Hare at Briefing.com.
A separate report showed U.S. new home sales edged higher in August by 0.7 percent for a fifth consecutive monthly increase, although the gain was smaller than expected on Wall Street.
"This is a good news-bad news report. The good news is that inventory continues to come down," said Patrick Newport at IHS Global Insight.
Newport said the bad news was that the report showed the median time a new home was on the market was a record 12.9 months.
"From a builder's perspective, the market for selling new homes is still brutal, despite the pickup in sales in recent months," he said.
A rise in the University of Michigan's consumer sentiment index to the highest level since January 2008 failed to spark any sustainable gains.
"Investors were disheartened by the morning's durable goods retrenchment, and were unconsoled by improving consumer confidence and new home sales," said Sara Kline at Moody's Economy.com.
Al Goldman at Wells Fargo Advisors said the market appears to be in a correction phase that can work off some of the excesses of a six-month rally of roughly 60 percent for the broad market.
"A several-day pullback has begun. We believe it will be measured in days, not weeks but it still must be respected after the 60 percent rally from the March 9 lows," he said.
"The big picture is still a bull market which we believe will be higher by year-end."
Among key stocks, Hewlett-Packard rose 0.32 percent to US$47.02 after the computer giant said it expects the tech industry to return to growth in 2010.
Research in Motion meanwhile slid 17.05 percent to US$68.91 after the Canadian-based maker of the BlackBerry smartphone reported a disappointing quarterly report that raised fears of slower growth.
Sara Lee lifted 6.36 percent to US$11.21 after agreeing to sell its global body care and European detergents businesses to Anglo-Dutch group Unilever for 1.28 billion euros (US$1.83 billion).
KB Homes slid 8.52 percent to US$16.96 after the home builder posted quarterly results below most estimates and amid warnings of a slow recovery in the sector.