Wall Street finished Thursday’s seesaw session up slightly, as investors attempted to overcome new data that might indicate the economy is moderating faster than the Federal Reserve anticipated.
The market moved lower for much of the day after getting further evidence of a slowdown from sluggish housing numbers and a disappointing durable goods report. Investors have been struggling to rebound after a week of losses as investors question whether the Fed’s campaign of interest rate hikes has hurt the economy.
The data bolstered views that the Fed will remain on the sidelines for the time being. However, slowing economic indicators also mean consumer spending is on the decline — a key factor that drives the economy and corporate earnings.
“Looking beyond just the numbers the trend is obviously toward slowing housing demand,” said Elisabeth Denison, a U.S. economist with securities firm Dresdner Kleinwort. “The Fed has been banking on this to help cap inflation as we go through the year, but it also calls into question that maybe things have gone too far.”
The Commerce Department reported sales of new homes fell 4.3 percent in July, the biggest drop since February. The report comes one day after the National Association of Realtors reported sales of previously owned homes had a bigger than expected drop, prompting a market sell-off.
Meanwhile, the department said orders to U.S. factories for big-ticket manufactured goods fell 2.4 percent in July as demand for aircraft and automobiles weakened. And the Labor Department said the number of Americans filing claims for unemployment benefits last week slipped by 1,000 to 313,000.
Light summer volume contributed to the market’s gyrations. The Dow Jones industrial average finished the day up 6.56 points, or 0.06 percent, while the broader Standard & Poor’s 500-stock index added 3.07 points, or 0.24 percent. The Nasdaq composite index finished with a gain of 2.45 points, or 0.11 percent.
Bonds were flat, with the yield on the benchmark 10-year Treasury note at 4.81 percent from the same level Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Oil prices rose. Crude has been affected this week by continued uncertainty in the Middle East, and after U.S. government data showed rising supplies of gasoline as refiners increased output.
One portfolio manager said the market’s gyrations had more to do with light trading and a hair-trigger reaction by investors looking for direction.
“The summer is a seasonally weak time for the market, and we’re getting into the tail end of that,” said Art Nunes, portfolio manager of the IMS Strategic Allocation Fund in Bellevue, Wash. “The markets are weaker today, but it’s more a case of the summer doldrums than any major factor. As we approach the fall, people will come back to work and the volume will pick up.”
Retailers, which have been depressed over concerns that consumer spending has dropped, were also a casualty in early trading. Chico’s FAS plunged $6, or 25 percent, to $18.08 after the woman’s retailer reduced its outlook for the third and fourth quarters.
Williams-Sonoma Inc. dropped $2.71, or 8.31 percent, to $29.89 after the housewares retailer slashed its outlook for the rest of the year due to disappointing sales at its Pottery Barn chain.
Rite Aid Corp. agreed to buy U.S. drug stores from Canada’s Jean Coutu Group Inc. in a $2.55 billion cash and stock deal. Rite Aid slipped 32 cents, or 6.84 percent, to $4.36. The deal makes Ride Aid the largest drugstore chain operator on the East Coast, trailing Walgreen and CVS nationally.
After hovering near 52-week lows, and being punished after Wednesday’s release of existing home sales numbers, homebuilders staged a rebound. Pulte Homes Inc., the nation’s largest homebuilder, rose $1.16, or 4.13 percent, to $29.25. Toll Brothers Inc. added 87 cents to $25.42.
Apple Computer Inc. fell 50 cents to $67.81 the company announced it would recall 1.1 million laptop batteries supplied by Sony Corp. because of a fire hazard. The same batteries supplied by Sony also prompted Dell Inc. to institute a similar recall. Sony’s U.S. shares price fell $1.16, or 2.61 percent, to $43.26.
Ford Motor Co., the nation’s second-largest automaker, finished flat at $7.76 amid reports the Ford family is considering taking the company private to bolster its restructuring efforts.
With criminal charges being dropped over multibillion-dollar accounting irregularities, Fannie Mae — the government sponsored mortgage lending giant — picked up $2.36, or 4.80 percent, to $51.53.
Overseas, Japan’s Nikkei stock average closed up 1.25 percent. At the close, Britain’s FTSE 100 was up 0.16 percent, Germany’s DAX index was up 0.67 percent and France’s CAC-40 rose 0.59 percent.