US stocks closed lower last night after weak durable goods figures and a downbeat assessment of the economy from the Fed's Beige Book kept the benchmark S and P 500 trapped below its 200-day moving average.

A three-day rally built on strong earnings boosted the index to close Monday above its 200-day moving average, a closely watched measure of market direction. It has since stalled as trading remains rangebound and technically driven.

"In the short run technicals are dominating daily movements here until we get a fundamental (piece of news) to knock us off that," said Jim Paulsen, chief investment officer at Wells Capital Management.

The Dow Jones industrial average dropped 39.81 points, or 0.38 pc, to 10,497.88.

The Standard and Poor's 500 Index dropped 7.72 points, or 0.69 pc, to 1,106.12, while the Nasdaq Composite Index dropped 23.69 points, or 1.04 pc, to 2,264.56.

With 49 pc of S and P 500 companies now having reported earnings, 77 pc have beaten expectations.

Boeing disappointed investors yesterday when it forecast full-year earnings slightly below estimates. The plane maker's shares fell by 1.9 pc.

The U.S. Federal Reserve's Beige Book, a summary of national economic conditions, added to the disappointment. It indicated activity was not as robust in a few districts and had lost steam over the past several weeks. (c) Reuters