NEW YORK — Disappointing forecasts from technology companies and an unexpected drop in home construction added to worries about the economy Wednesday and sent stocks modestly lower.
The drop came a day after major stock indicators closed at 13-month highs. The Dow Jones industrial average slipped 11 points after having risen in nine of the previous 10 days. A drop in technology stocks weighed on the Nasdaq composite index.
Analysts say the market has been due for a break after the fast ascent.
John Brady, senior vice president of global interest-rate products at MF Global in Chicago, said that as the end of the year approaches, traders are looking foremost at preserving the gains amassed in an eight-month rally that has given the benchmark Standard & Poor’s 500 index a gain of 22.9 percent so far in 2009.
“It’s a bit of a consolidation trade,” he said. “Traders are scared to go too far out on a limb here and do anything too risky late in the year.”
Technology shares fell after BMO Capital Markets said BlackBerry maker Research in Motion faces increased competition as consumers opt for less expensive phones. Meanwhile, forecasts from software makers Autodesk and fell short of analysts’ expectations.
The Dow fell 11.11, or 0.1 percent, to 10,426.31, after sliding as much as 77 points in morning trading. The broader S&P 500 slipped 0.52, or 0.1 percent, to 1,109.80, while the Nasdaq fell 10.64, or 0.5 percent, to 2,193.14.
The light at the end of the recessionary tunnel flickered Wednesday as a Commerce Department report showed that housing starts fell in October and the Labor Department said consumer prices rose slightly more than anticipated during the month.
Housing starts were down 10.6 percent, while the Consumer Price Index rose 0.3 percent, not the 0.2 percent economists had predicted.
Trading volume was light, as it has been for weeks, which suggests the market may have trouble holding on to a surge that has pushed the Dow up 714 points (7.4 percent) this month.
Matthew Eads, portfolio manager at Eads & Heald Investment Counsel in Atlanta, cautions that stocks could pull back if such problems as unemployment don’t ease or if confidence about a recovery falters.
“As long as people perceive fear or are losing their jobs, spending is going to go down,” he said.
