Wall Street closed out a volatile week with a mixed performance Friday after a pair of economic reports damped hopes for an interest rate cut anytime soon. The major indexes were down for the week.
Stocks found some late-day strength as investors sought bargains after a two-day pullback that erased most of the market's 2007 gains.
An upbeat outlook from heavy machinery maker Caterpillar lent some support to the Dow Jones industrial average. However, those gains were offset by economic reports that raised concerns about interest rates.
The Commerce Department said new-home sales rose 4.8% in December, well above economists' projections, suggesting that the slumping housing market might have bottomed out. The department also said orders to U.S. factories for big-ticket manufactured goods rose in December by the largest amount in three months, led by demand for commercial aircraft.
Investors had been holding on to hopes that the Federal Reserve might cut rates in the first half of the year. However, a steady stream of positive economic reports, such as those issued Friday, are making that unlikely and instead raising the possibility that the Fed might resume its campaign of rate hikes that ended in August. Fed policymakers meet next week.
"The biggest driver is concern the Fed might see more reasons to raise rates than to lower," said Arthur Hogan, chief market analyst at Jefferies & Co.
The Dow index was down 70 points early in the day but rebounded to end down 15.54 points, or 0.1%, at 12,487.02.
Broader stock indicators were mixed. The Standard & Poor's 500 index was down 1.72 points, or 0.1%, at 1,422.18, and the Nasdaq composite rose 1.25 points, or 0.1%, to 2,435.49.
Long-term bonds were little changed, with the yield on the benchmark 10-year Treasury note edging down to 4.87% from 4.88% on Thursday. Bond yields climbed sharply Thursday as the belief that the Fed would stand pat on short-term rates took hold.
Oil prices rose after a steep decline in the previous session because of doubts about production cuts that OPEC members promised last year. Crude oil futures rose $1.19 to $55.42 a barrel.
Friday's performance capped a week in which the stock market shuttled from optimism about corporate earnings and a possible interest rate cut in the first part of the year to dejection over an economy that could be strong enough to force a rate hike. Generally good earnings reports were cast aside while investors focused on the Fed's likely moves.
