Stocks fluctuate after report on consumer prices
NEW YORK -- Wall Street struggled to find a direction today as investors, already nervous about the fate of the nation's top automakers, scoured more economic data in search of some relief.
Investors vacillated as they tried to hold on to the gains achieved in the previous session. Still, reports on consumer prices and new-home construction provided more evidence that the economy remains in flux.
According to the Labor Department's Consumer Price Index, consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount. While lower prices might be good for the consumer, they can hurt corporate profits. Lower prices also raise the threat of deflation, a prolonged bout of falling prices that hasn't been seen in the U.S. since the Great Depression.
Meanwhile, a government report on the housing sector showed that the industry's severe correction continues. The Commerce Department reported that construction of new homes plunged 4.5 percent last month to the lowest level on government records.
The market is also bracing for more testimony in Congress from the heads of General Motors Corp., Ford Motor Co., and Chrysler LLC. They are asking lawmakers for a massive infusion of cash to prevent millions of layoffs, stave off bankruptcy and stabilize the companies.
Investors are concerned at the repercussions should any of the three automakers collapse, an event that could ripple through an already battered economy. Congressional Democrats have proposed using part of the $700 billion financial bailout package to pump into the ailing auto industry, but Republicans oppose such an approach.
In midmorning trading, the Dow Jones industrial average rose 4.46, or 0.05 percent, to 8,429.21. Standard & Poor's 500 index fell 2.20, or 0.26 percent, to 856.92, while the Nasdaq composite index fell 0.40, or 0.03 percent, to 1,482.87.
The Russell 2000 index of smaller companies fell 3.08, or 0.69 percent, to 444.43.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to a light 186.63 million shares.
Wall Street rebounded Tuesday in another turbulent session, as investors rushed back into the market after testing a 2003 low. The Dow finished up 151 points, with most of the gains coming in the final hour of trading.
