U. S. stocks fell Wednesday as traders looked again to the threat posed by Europe's lingering debt crisis. The decline came in spite of a government report that U.S. factory orders rose strongly last month, a sign that businesses continue to invest.
The Dow Jones industrial average fell 40 points to 13,157 in late morning trading. The broader Standard & Poor's 500 index fell 6 to 1,406. The Nasdaq composite index, heavy with technology stocks, fell 10 to 3,110.
Many traders are holding back because they expect news later this week on Europe's progress in resolving its debt crisis, said Andrew Goldberg, global market strategist with J.P. Morgan Funds.
"Investors know Europe is still in crisis" and fear a steeper drop if markets are spooked by a meeting of European finance ministers that begins Thursday and Spain's budget announcement on Friday, Goldberg said. He said that's probably more important for the stock market than the data on long-lasting factory goods.
The Commerce Department said before the market opened that orders for durable goods, things expected to last at least three years, rose 2.2 percent in February. Orders for machinery, computers, autos and aircraft fueled the rise.
The solid report on factory orders relieved fears that demand might fall sharply because a key tax break expired. Businesses last year could deduct the cost of their investments from taxable profits before calculating their tax bills. That tax benefit has been halved since January.
The positive economic news reduced demand for U.S. Treasury debt. The yield on the 10-year Treasury rose to 2.21 percent from 2.19 percent before the report. As stocks fell in morning trading, traders sought the safety of Treasurys and the yield fell back to 2.19 percent.
The encouraging report on orders for durable goods came a day after an index of consumer confidence suggested Americans' spirits are relatively resilient despite skyrocketing gasoline costs.
Energy prices, another concern for economic policymakers, might be moving in a direction that would encourage growth. Futures for crude, natural gas, heating oil and gasoline all fell early Wednesday, with gasoline leading the way.
Oil prices fell to near $105 a barrel Wednesday after a report suggesting a larger-than-expected jump in U.S. crude supplies, a sign that demand remains weak.
The American Petroleum Institute said late Tuesday that crude inventories rose 3.6 million barrels last week. That is a bigger jump than was predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. Analysts in that survey expected an increase of 2.8 million barrels.
If consumers get a break on what they have to pay for energy, that could provide a bump for the U.S. economy.
In corporate news:
-- Shares of organic food maker Annie's soared in their trading debut on the New York Stock Exchange. The company, based in Berkeley, Calif., priced its shares at $19 late Tuesday. They were up 75 percent at $33.25 at 11 a.m.
-- Shares of Sealy Corp. rose 4 percent after the mattress maker reported a surprise profit in the first quarter of 1 cent per share. Analysts surveyed by FactSet had expected a loss of 2 cents per share.
-- Shares of Medco Health Solutions Inc. jumped 3 percent after the company said its $29.1 billion merger with Express Scripts Inc. could close as early as next week. Express Scripts rose 1 percent.
Daniel Wagner can be reached at www.twitter.com/wagnerreports .