U.S. durable goods orders came in much weaker than expected today, spooking traders.

Orders fell 3.8% when economists were calling for a modest gain. And, excluding the volatile transportation orders, bookings were still down 3.1%.

“The trend in order backlogs does not look encouraging,” says BMO Nesbitt Burns. “It’s important to note that other factory data, such as industrial production and the ISM index, remained upbeat lately. So, we will simply have to wait to see if this weakness in orders is a one-off event, or presages a second-half economic slowdown. It surely does not look like a strong factory rebound is gathering momentum on these figures.”

BMO notes that the report’s details were uniformly on the downside. Primary metals orders lost 2%. Fabricated metals were down 3.3%. Machinery orders fell 6.7%. Tech sector orders were off 3.9%.

RBC Financial Group says, “Market watchers are waiting for a rebound in capital spending to provide the last piece of the puzzle for a vigorous U.S. economic recovery. After June’s report, they will have to keep waiting. This will almost certainly add to pessimism about the state of the U.S. economy.”

“This report was bad news. However, it was isolated bad news, and financial markets can suspend judgement legitimately,” concludes BMO.