Stocks ended the next-to-last day of 2009 little changed as welcome news on manufacturing helped offset a drop in commodities prices.
The market drew support Wednesday from a key economic indicator that signaled growth in Midwest manufacturing for a third straight month. The Chicago Purchasing Managers Index rose to 60 in December from 56.1 in November. The report found that production and new orders increased and employment improved.
A rising dollar and light volume held the market's gains in check. A gain in the dollar makes commodities, and thus the shares of companies that produce commodities, less attractive to foreign buyers. It also hurts the profits of companies that do business overseas.
Some investors have been buying the dollar in recent weeks on the belief that the economy is improving and the Federal Reserve will raise interest rates in the next year. That buying interest comes after a months-long slide in the greenback.
Rock-bottom interest rates have encouraged investors this year to move out of cash and into riskier assets such as stocks and commodities that have the potential to earn bigger returns. While a rise in interest rates would be a sign that the economy is on the right track, it could hurt the stock market's advance.
After a 24.7 percent rise in the benchmark Standard & Poor's 500 index this year, many investors have closed their books and are making few moves ahead of the start of 2010. Trading has been quiet with fewer players in the market, though light volume can also bring volatility.
"We've seen oil up and down, the dollar up and down, the market up and down," said Frank Ingarra, co-portfolio manager at Hennessy Funds. "I don't think we'll see a major move one way or the other."
The Dow Jones industrial average ticked up 3.10, or less than 0.1 percent, to 10,548.51, its highest close since Oct. 1, 2008. The Dow traded in a 45-point range, its sixth straight day of moving fewer than 70 points. The last time the Dow held such a tight range for that period was November 1996.
With one trading day left in the year, the Dow is up 61.1 percent from the 12-year low it reached in March, but is still down 25.5 from its peak of 14,164.53 in October 2007.
The S&P 500 index edged up 0.22, or less than 0.1 percent, to 1,126.42, while the Nasdaq composite index rose 2.88, or 0.1 percent, to 2,291.28.
The modest moves came a day after stocks broke a six-day winning streak as reports on home prices and consumer confidence failed to rally investors.
The ICE Futures U.S. dollar index, which measures the dollar against other major currencies, rose 0.1 percent. Gold and other metals fell. Oil prices rose after the government reported that the nation's crude supply fell for a fourth week in a row. Light, sweet crude added 41 cents to settle at $79.28 a barrel on the New York Mercantile Exchange.
Bond prices mostly rose following an auction of seven-year notes. In total, the Treasury auctioned $118 billion in debt for the week. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.79 percent from 3.80 percent. Interest rates on many consumer loans track the yield on the 10-year Treasury.
The day brought reminders that companies are still hurting from the blows of the recession.
The government was preparing to extend another multibillion loan to GMAC Financial Services to further stabilize the auto financing company, according to a person familiar with the matter. GMAC, instrumental to the operations of automakers General Motors Co. and Chrysler Group LLC, has already received $12.5 billion in taxpayer money and is 35 percent owned by the federal government. The person, who spoke on condition of anonymity because discussions weren't complete, said the bailout would be in the range of about $3 billion.
Meanwhile, Aetna Inc. said it expects to book a fourth-quarter charge of up to $65 million to cover the costs of layoffs and consolidations. Shares of the health insurer fell 71 cents, or 2.2 percent, to $32.15.
Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to an anemic 644.4 million shares.
In other trading, the Russell 2000 index of smaller companies rose 0.23, or less than 0.1 percent, to 633.41.
Overseas, Britain's FTSE 100 fell 0.7 percent, Germany's DAX index lost 0.9 percent, and France's CAC-40 fell 0.6 percent. Japan's Nikkei stock average fell 0.9 percent.