updated 5/29/2008 8:41:48 AM ET 2008-05-29T12:41:48

Wall Street managed to finish an erratic session with a moderate gain Wednesday as investors found some comfort in upbeat data on durable goods orders.

Major Market Indices

Oil prices, however, remain a big focus on Wall Street. Crude’s recovery from its lows Wednesday ate into some of the stock market’s enthusiasm over the Commerce Department’s durable goods report; the government said orders for items including aircraft, machinery, cars, refrigerators and computers slipped 0.5 percent last month.

Wall Street expected a steeper decline. Excluding transportation, orders rose 2.5 percent — the sharpest increase in nine months. And orders for electrical equipment and appliances jumped 27.8 percent, the largest-ever increase.

But oil’s comeback touched off renewed worries that high energy prices will hurt businesses and their customers. Hesitation among shoppers isn’t what investors want, as consumer spending accounts for more than two-thirds of U.S. economic activity.

“It seems that the good news is really being kind of overshadowed by high oil prices,” said Richard Sparks, a senior equity analyst at Schaeffer’s Investment Research in Cincinnati. “The fear is that higher oil prices might drive us into that recessionary area.”

According to preliminary calculations, the Dow Jones industrial average rose 45.68, or 0.36 percent, to 12,594.03. The blue chips had been down more than 45 points earlier in the session.

Broader stock indicators also ended higher. The Standard & Poor’s 500 index rose 5.49, or 0.40 percent, to 1,390.84, and the Nasdaq composite index rose 5.46, or 0.22 percent, to 2,486.70.

Bond prices fell following the durable goods report. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 4.02 percent from 3.92 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose $2.18 to settle at $131.03 per barrel on the New York Mercantile Exchange after being down nearly $3 a barrel earlier in the session.

“There’s a lot of commentary especially out of the Fed that the oil prices are rising because of basic demand as opposed to speculation in the market. I think that has a chilling effect on the stock market,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group.

A drop of more than $3 a barrel helped stocks finish higher Tuesday, the first day of trading for the week after Memorial Day. But last week, oil saw a fresh record of $135, and the major stock market indexes lost more than 3 percent as investors worried that a surge in oil and gas prices would dull discretionary spending and upend whatever growth the economy might manage.

“The consumer’s behavior is changing. They’re not getting in their car, driving to Wal-Mart and loading up on tchotchkes that they may or may not need,” Caughey said.

Gas prices rose to a fresh record Wednesday over $3.94 a gallon, according to AAA and the Oil Price Information Service.

In corporate news, financial shares were among the worst performers in stocks after a Citi Investment Research analyst said the $20 billion in capital recently raised by American International Group Inc. was insufficient and that the insurer’s financial position could worsen. AIG was the steepest decliner among the 30 stocks that comprise the Dow industrials. The stock fell $1.71, or 4.7 percent, to $34.91.

Soft drink bottler Coca-Cola Enterprises Inc. fell $1.13, or 5.3 percent, to $20.18 after warning that weak sales trends in the U.S. would likely lead to a drop in its second-quarter profit and that meeting its 2008 earnings forecast could be difficult.

Several retailers showed strength. Polo Ralph Lauren Corp. jumped $7.25, or 11.7 percent, to $69.00 after reporting its fiscal fourth-quarter earnings jumped 41 percent because of higher sales and lower taxes. The company also predicted first-quarter revenue would increase.

American Eagle Outfitters Inc. issued a second-quarter profit forecast that topped Wall Street’s expectations. The stock gained $1.39, or 8.1 percent, to $18.61.

The Russell 2000 index of smaller companies rose 4.07, or 0.55 percent, to 738.46.

Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where volume came to 1.21 billion shares.

Overseas, Japan’s Nikkei stock average closed down 1.32 percent. Britain’s FTSE 100 rose 0.18 percent, Germany’s DAX index advanced 1.08 percent, and France’s CAC-40 rose 1.32 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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