US stocks finish higher
US stocks finished another erratic session modestly higher today after durable goods and home sales data helped ease investors’ anxiety about whether the Federal Reserve will continue raising interest rates.
A sharp drop in April orders for big-ticket manufactured items drove hopes that the Fed has lifted rates enough to slow a robust economy.
While the Commerce Department also reported an unexpected jump in new home sales last month, overall housing demand continues to fall gradually after five years of record sales.
But recent volatility on Wall Street has shown that investors remain on edge about inflation and the chance of higher lending rates, and any hint of rising prices or accelerating growth has made traders wary of leaving too much money in the market.
The major indexes teetered in negative territory for most of the afternoon before a late-day rally lifted stocks from their losses.
Wall Street is trying to recover from two weeks of steep declines, with the Dow Jones industrial falling about 5% from a six-year high on May 10.
Stocks showed some signs of stabilising this week but continue to wobble. Worries about the impact of high energy prices triggered a late sell-off yesterday, erasing an earlier advance.
Still, analysts say the up-and-down trading is likely to continue as bargain hunters take advantage of the recent correction to lock in short-term profits while uncertainty over the economy and interest rates lingers.
The Dow added 18.97, or 0.17%, to 11,117.32, after swinging nearly 70 points in both directions. The Dow is 4.5% below a six-year closing high of 11,642.65, reached on May 10.
Broader stock indicators turned higher in the last hour of activity. The Standard & Poor’s 500 index rose 1.99, or 0.16%, to 1,258.57, and the Nasdaq composite index gained 10.41, or 0.48%, to 2,169.17.
Despite the indices’ advance, declining issues led advancers by more than nine to seven on the New York Stock Exchange.
The imbalance reflected investors’ pessimism toward stocks as Wall Street intensifies its recent trend of selling, said Chris Johnson, manager of quantitative analysis for Schaeffer’s Investment Research.
“Honestly, until we get the (Fed’s June 29) rate meeting out of the way and we see the verbiage from that, investors are going to remain on the edge,” Johnson said. “Right now, this type of market is not a good place to be.
“As long as we’re in limbo, the downside is going to be the easier path for the market,” he said.
Bonds edged lower although today’s economic data improved the outlook for interest rates. The yield on the 10-year Treasury note rose to 5.04% from 5.03% late yesterday.
Elsewhere, the US dollar recouped losses to the Japanese yen and was little changed against European currencies, while gold plunged to about 645 an ounce.
Crude futures retreated after the government’s weekly update showed increased gasoline reserves and stagnant motor fuel demand for the fourth straight week. A barrel of light crude lost $1.90 to settle at $69.86 on the New York Mercantile Exchange.
In economic news, the Commerce Department said durable goods orders sank 4.8% in April, led by plunging demand for computers and aircraft. Economists were predicting a mild 0.5% slide after orders surged 6.6% in March.
Meanwhile, new home sales grew to about 1.2 million in April from 1.14 million the previous month, topping expectations for sales to decline slightly.
Despite the gain, the median price fell 7.3%, further evidence that the market is beginning to cool as mortgage rates bounce back from historic lows.
Optimism over General Motors Corp.’s restructuring moves prompted Merrill Lynch to upgrade the automaker to “buy”, a week after KeyBanc Capital Markets made a similar call. Dow component GM jumped $1.97 to $26.45.
Vonage Holdings Corp. slipped in its trading debut after the voice-over-IP provider set its initial public offering at $17 apiece, the midpoint of its expected price range. Vonage was down $2.23 at $14.77.
The Russell 2000 index of smaller companies lost 0.03 to 711.26.
NYSE volume of 1.73 billion shares topped the 1.38 billion shares that changed hands yesterday.
