Friday Sept 25 Recap

Over the past three sessions, the major indexes have seen their largest weekly loss since early July. Understandably, market mood has undergone a bit of a shift over the past few days as a perhaps unjustifiably high degree of optimism has given way to some pessimism. Apart from the widespread sense that after a 60% rally off the March lows, the major indexes were a little overstretched to the upside, disappointing reports on home sales and on the manufacturing sector contributed to worries that the US economic recovery might not progress as smoothly and rapidly as some had hoped.

According to new data released by the Commerce Department today, durable goods orders were off by 2.4% in August, an unexpected slide because economists had been calling for a rise of 0.5%. In contrast, durable goods orders had risen 4.8% in July. The numbers are important because they represent a key indicator for the health of the manufacturing industry. In other economic news, it was reported today that new home sales in August were up (increasing to 429,000); however, this represents an increase well below the expectations of market analysts; it is in fact only a shallow improvement compared to four months of strong gains. Again, investors' expectations were not met.

Yesterday's disappointing earnings report from one of the tech sector's flagship companies - BlackBerry maker Research in Motion - served to drag down the NASDAQ Composite Index. Research in Motion's stock tumbled more than 17% today. Analysts comment that the fact that this Wall Street darling missed earnings suggests the economic recovery is still tenuous.

Market observers comment that many investors may be underestimating how long it can take for an economy to recover. On Friday next week, the Labor Department will release its monthly jobs reports (the non-farm payrolls report), one of the most closely watched economic indicators. Other key economic data to be released next week includes the latest numbers on consumer confidence, factory orders, home prices, and manufacturing.