Market Talk

US stocks drop after a surprisingly weak durable goods report, even as crude futures fall about $4 and the Fed’s Beige Book tries to paint a happy face on the recession. (video recap, sans discussion of Beige Book, here.)

DJIA drops 26 to 9071, S&P 500 loses 4 to 975, Nasdaq Comp drops 8 to 1968. Volume’s decent; 5.2B shares on Big Board.

Once again, last half-hour brings a wave of bids that moderate the day’s losses. The DJIA was down about 75 points at 3 p.m. before the buyers suddenly showed up, practically bringing the index to flat before it eased a bit into the close. Are we nuts, or should the market be open for just an hour a day? Is there a point in having it open longer? Doesn’t seem to be.

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Why, those boats are just stuffed with value!

So Microsoft and Yahoo finally did a deal. Does it matter? Does anybody care anymore?

The two companies, also-rans to Google in the search arena, signed a 10-year deal in which Microsoft will provide the search technology and Yahoo the sales team.

“Microsoft, which last year made a failed $47.5 billion takeover bid for Yahoo, finally wins what it wanted most from the Internet pioneer – huge volumes of queries that run through Yahoo’s search engine,” the Wall Street Journal reports. “At the same time, Yahoo will reap additional search-advertising business to expand its share of the market.”

The Street greeted with the deal with a yawn. Yahoo shares fell sharply and Microsoft shares rose modestly. The deal’s good for Microsoft, Pacific Crest says, because there isn’t any upfront payments and it ends up with 30% search market-share. But it’s bad for Yahoo, Needman says, for a number of reasons.

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Couple things catching our eye in this morning’s premarket, namely the weakness in Asian stocks — particularly China — overnight, and crude oil prices off sharply again after yesterday’s selloff.

China’s Shanghai composite fell 5%, its biggest percentage drop since November, and Hong Kong skidded 2.4%. Stocks in India were down 1.3%. Reports cite disappointing Chinese corporate profits, falling commodities and concerns about loan growth as culprits. Stocks in Europe so far unfazed and trading higher.

Elsewhere in the world, Microsoft and Yahoo, it appears, have finally struck a deal to partner up in the search arena and take on some of those, you know, other players in the space. Will anybody besides Steve Ballmer and Carol Bartz care?

June durable goods orders due at 8:30am; Fed’s Beige Book release set for 2:00pm ET. Another big Treasury auction at 1:00pm, $39B in 5-yr notes.

S&P futures down 5.10; DJ futures down 36. Ten-year higher, yield at 3.66%.