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Stocks dip at open after 6-day advance in the Dow

August 27, 2009|Associated Press

NEW YORK — Stock investors responded with little enthusiasm Wednesday to some upbeat economic data, but the Dow Jones industrials managed to rise for a seventh straight session, marking another high for the year.

The Dow and other major stock indexes each gained less than 0.1% despite a Commerce Department report that said sales of new homes rose 9.6% in July, much more than economists had expected.

Some of that increase can be attributed to a federal tax credit for first-time homeowners. The break is set to expire in November, and the industry has been pressing Congress to extend it.

Separately, the Commerce Department said orders for durable goods rose 4.9% in July -- the biggest jump in two years and more than the 3% boost economists had expected.

But the boost was driven by a surge in orders for transportation equipment, which benefited from the government's recently expired "cash for clunkers" program that drove thousands of people to trade in older cars for new ones. Excluding transportation goods, orders rose 0.8%, just short of analysts' expectations.

The Dow edged up 4.23 points to 9,543.52. Over the last seven days, the index has risen 408 points, or 4.5%.

The Standard & Poor's 500 index rose 0.12 of a point to 1,028.12, while the Nasdaq composite index rose 0.20 of a point to 2,024.43.

The Russell 2,000 index of smaller companies rose 0.1%.

Declining stocks narrowly outnumbered advancers on the New York Stock Exchange, where volume was light.

Shares of home builders surged for a second day, after the housing report showed the supply of new homes on the market shrank to the lowest level since April 2007. If supply is decreasing, builders may need to ramp up production.

Hovnanian Enterprises rose 9.4%, tacking on to its 6.5% jump on Tuesday. The stock is now at its highest level since October. Lennar rose 4.1%, its highest point since September.

Sharp declines in industrial and material stocks weighed on the market as commodity prices wavered. A long rally in commodities that started earlier this year has been sputtering in recent weeks because of worries of waning demand from China.

Oil prices slumped Wednesday after the government reported an increase in crude supplies. Crude futures fell 62 cents to $71.43 a barrel on the New York Mercantile Exchange.

Government bonds were little changed despite favorable demand at a Treasury auction of $39 billion in five-year notes. The yield on the benchmark 10-year Treasury note held steady at 3.44%, unchanged from late Tuesday.

The dollar mostly rose against other major currencies. Gold prices were flat.

Overseas, key stock indexes declined 0.5% in Britain, 0.6% in Germany and 0.3% in France. Japan's Nikkei average advanced 1.4%.

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