Aug. 26 (Bloomberg) -- Most U.S. stocks declined as a smaller-than-estimated rise in orders for some durable goods and possible curbs on raw-materials suppliers in China outweighed a surge in new-home sales.

General Electric Co., 3M Co. and Caterpillar Inc. slumped more than 1.2 percent after U.S. bookings for items meant to last several years, excluding cars, trucks and airplanes, climbed less than economists projected. U.S. Steel Corp. dropped 2.4 percent as China said it may seek to reduce overcapacity among steel and cement producers. Home Depot Inc. rose 0.9 percent after the 9.6 percent jump in home purchases last month.

About 11 companies fell for every 10 that rose on the New York Stock Exchange. The Standard & Poor’s 500 Index added 0.12 point, or less than 0.1 percent, to 1,028.12 at 4 p.m. after swinging between gains and losses at least 25 times, according to data compiled by Bloomberg. The Dow Jones Industrial Average gained 4.23 points, or less than 0.1 percent, to 9,543.52.

“Capital spending is not likely to recover as quickly as in past cycles,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $8 billion. “Investors are inclined to harvest some profits.”

Most equities pared gains from yesterday, when better-than- estimated consumer confidence and home prices bolstered optimism the recession is ending. A proxy for future business investment contained in the durable goods orders report, bookings for non- defense capital goods excluding aircraft, fell 0.3 percent, damping optimism the S&P 500’s 52 percent rebound since March foreshadowed improvement. The Conference Board’s index of leading economic indicators has risen four straight months.

‘Talk the Market Down’

GE, 3M and Caterpillar led industrial companies in the S&P 500 to a 0.9 percent drop, the biggest among the index’s 10 industries, following the Commerce Department’s report on durable goods.

GE, the world’s biggest maker of locomotives and medical imaging equipment, fell 1.3 percent to $14.11. 3M, the maker of 55,000 products from Post-It notes to electronic road signs, dropped 1.7 percent to $71.42. Caterpillar, the world’s largest maker of construction equipment, slumped 1.2 percent to $47.25.

U.S. Steel fell 2.4 percent to $43.24. China’s cabinet said it’s studying curbs on overcapacity in industries including steel and cement as policy makers seek to rein in investment growth fueled by a record credit expansion this year.

“A lot of people are trying to talk the market down, but the news has been pretty good,” said William Dwyer, chief investment officer at MTB Investment Advisors, which manages $13 billion in Baltimore. “The market will keep trending up.”

Home Improvement

Home Depot, the largest home-improvement retailer, gained 0.9 percent to $27.57. The July increase in new home sales was the biggest since February 2005, and compared with a median economist estimate of 1.6 percent.

D.R. Horton Inc. led homebuilders in the S&P 500 to a 3.4 percent advance. The group rose 3.2 percent yesterday after the S&P/Case-Shiller home-price index for 20 U.S. cities dropped by the smallest amount since April 2008. The index of builders’ stocks is at the highest level since October.

U.S. stocks are “a tad overpriced by historical standards,” Robert Shiller, chief economist at MacroMarkets LLC and an economics professor at Yale University, said in a Bloomberg Radio interview.

Equities traded for 18.35 times earnings yesterday after falling to 13.32 in March, the cheapest since 1986, based on a monthly analysis by Shiller, whose 2000 book “Irrational Exuberance” predicted the market’s collapse. The valuation was 27.31 in October 2007, when the S&P 500 climbed to a record 1,565.15. His methodology uses a decade of earnings to smooth out short-term fluctuations.

Spending Slowdown

Jacobs Engineering Group Inc. fell 2.8 percent to $45.10. The second-largest publicly traded U.S. engineering company was cut to “underweight” at Johnson Rice & Co., which cited the stock’s valuation and said spending from oil and gas customers may slow.

Hain Celestial Group Inc. fell 7.4 percent to $16.66. The biggest U.S. maker of organic foods forecast profit of $1.28 a share at most in fiscal 2010. That trailed the $1.37 average estimate of analysts in a Bloomberg survey.

Among S&P 500 companies, 72.3 percent beat the average analyst estimate for second-quarter profit, matching the highest proportion since Bloomberg began tracking the data in 1993.

Family Dollar Stores Inc., the discount retailer, gained after rival Dollar Tree Inc. posted quarterly profit and revenue that beat the average analyst estimates and boosted its full- year forecast. Family Dollar rose 3.5 percent to $30.82. Dollar Tree climbed 4.7 percent to $50.13.

Williams-Sonoma Inc., the U.S. gourmet-cookware retailer, rose 11 percent to $17.21. Second-quarter profit excluding some items was 5 cents a share, compared with an average analyst estimate of a 9-cent loss.

DSW Inc. climbed 7 percent to $15. The footwear retailer posted quarterly profit that beat the average analyst estimate and forecast full-year earnings of 37 cents to 45 cents a share, more than the 34-cent average estimate.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

Last Updated: August 26, 2009 16:44 EDT