Wall Street eked out small gains Tuesday as investors found solace in declining Treasury yields but remained subdued after Best Buy Co.’s lackluster profit forecast and a drop in new home construction.
The 10-year Treasury note’s yield, which hit five-year highs last week, fell to 5.07 percent from 5.14 percent late Monday — alleviating some worries about high rates slowing down corporate dealmaking and hurting the already sluggish housing market.
Also lifting the stock market was a rise in General Electric Co.’s stock, after its unit GE Energy Financial Services bought a stake in Regency Energy Partners LP, a natural gas processor and distributor, from HM Capital Partners LLC for $603 million.
The major stock indexes wavered throughout the day on concerns about flagging consumer spending when electronics chain Best Buy lowered its fiscal 2008 profit forecast, and after Commerce Department data showed construction of new homes and apartments fell 2.1 percent last month. The dip, which followed small increases in April and March, was expected and came alongside a 3 percent rise in May permit applications.
Economic data has at turns upended and supported the market in recent weeks as investors try to feel their way forward while juggling concerns about inflation, interest rates, the housing sector and the overall economy.
“After having a full plate of information to digest last week, we don’t have a lot of new incremental news. Today’s housing starts was not startling in either direction,” said Alan Gayle, senior investment strategist and director of asset allocation for Trusco Capital Management. “What’s encouraging is the sanity that’s returned to the bond market.”
At the close of trading, the Dow Jones industrial average rose 22.44, or 0.16 percent, to 13,635.42. The blue-chip index was buoyed largely by GE, which rose $1.22, or 3.2 percent, to $39.29.
Broader stock indicators also edged higher. The Standard & Poor’s 500 index rose 2.65, or 0.17 percent, to 1,533.70, and the Nasdaq composite index rose 0.16, or 0.01 percent, to 2,626.76.
Bonds rose after the weak housing data. While Wall Street has largely tried to look past weakness in the housing market as old news, any sign that the fallout isn’t contained and could taint other areas of the economy could alarm investors.
The dollar, which had strengthened in recent weeks as bond yields advanced, was lower against other major currencies. Gold prices rose.
Analysts said the stock market’s small back-and-forth moves Tuesday were to be expected after its big advance last week, when relief over inflation and interest rates sent stocks soaring and gave the Dow its biggest three-day point gain since November 2004.
“We’re taking a very normal time-out to refresh. One of the best ways to gauge a market is to see how it reacts when you have profit-taking. It shows that the mettle of the market is still quite positive, that there is still money on the sideline that wants in,” said Al Goldman, chief market strategist at A.G. Edwards.
Going forward, the stock market will be focusing more on individual company news and pre-announcements ahead of July’s second-quarter profit reports.
“It looks like investors have lowered their expectations for second-quarter earnings growth ... Companies will have a fairly low bar to step over when they start reporting next month,” Gayle said.
Best Buy reported its fiscal first-quarter earnings fell 18 percent amid weak profits in China and increased sales of lower-margin products such as notebook computers. The stock fell $2.83, or 5.9 percent, to $45.18.
Airline stocks lifted after an analyst upgrade of US Airways Group Inc. and an announcement from United Airlines that it is hiring pilots for the first time since 2001.
US Airways rose $1.85, or 6.8 percent, to $29.14.
UAL Corp., the parent company of United Airlines, rose $2.60, or 7.4 percent, to $37.93. Other airlines followed, with Continental Airlines Inc. rising 90 cents, or 2.7 percent, to $33.80; and AMR Corp. climbing 73 cents, or 2.9 percent, to $26.29.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to 1.46 billion shares, up from 1.23 billion Monday.
The Russell 2000 index of smaller companies rose 2.06, or less than 0.24 percent, to 848.34.
Overseas, Japan’s Nikkei stock average rose 0.08 percent. Britain’s FTSE 100 fell 0.80 percent, Germany’s DAX index fell 0.03 percent, and France’s CAC-40 slipped 0.25 percent.