Markets fizzle after Fed report

NEW YORK - Investors cashed in some gains Wednesday after the Federal Reserve gave them further confirmation that the economic recovery is slowing.

The Dow Jones industrial average fell almost 40 points after the Fed released its regional survey of the economy, the "beige book." The Fed said economic growth had been steady during the summer in Cleveland and Kansas City, Mo., but had slowed in Atlanta and Chicago. The central bank described economic activity elsewhere as modest. In the Philadelphia area, the Fed said, business activity generally had "moved up slightly" from June, but several industries remained soft.

Investors were not surprised by the Fed report, but they also did not like hearing their own downbeat assessment of the economy confirmed by the central bank.

The Fed survey followed a disappointing Commerce Department report early in the day on orders for durable goods. Orders for durable goods, which are expected to last at least three years, fell 1 percent in June. Economists expected a 1 percent gain.

Investors have been trying in recent weeks to balance strong earnings and corporate outlooks with economic data that are not as encouraging.

The Dow fell 39.81, or 0.38 percent, to 10,497.88. The Standard & Poor's 500 index fell 7.71, or 0.69 percent, to 1,106.13, while the Nasdaq composite index fell 23.69, or 1.04 percent, to 2,264.56.

Treasury prices, which get a boost from bad economic news, increased after the beige book was released. That sent interest rates lower.

David Hefty, chief executive officer of Cornerstone Wealth Management, said many investors were waiting for the government's report on gross domestic product, the broadest measure of the economy, before making big investing moves.

The report will be issued before trading opens Friday. Economists surveyed by Thomson Reuters are forecasting that the GDP increased at an annual rate of 2.3 percent from April to June. That would be down from the first quarter's annual rate of 2.7 percent.

Earnings reports were mixed Wednesday. Boeing Co. said its profit slipped from a year earlier, but results still topped expectations. The airplane-maker also did not adjust its outlook.

Sprint Nextel Corp. said it added subscribers to its network for the first time in three years during the second quarter as it improves customer service and retention. Its revenue slightly topped forecasts.

ConocoPhillips profit more than doubled as refining margins improved and oil prices increased.

Sprint Nextel shares rose 1 cent, to $4.84. Shares of ConocoPhillips were unchanged at $54.44. Boeing shares fell $1.30 to close at $67.32.

Overseas, Britain's FTSE 100 fell 0.9 percent, Germany's DAX index dropped 0.5 percent, and France's CAC-40 rose 0.1 percent. Japan's Nikkei stock average increased 2.7 percent.