NEW YORK – Wall Street closed out the week with modest gains Friday, though trading was erratic as encouraging signs of a cooling housing market conflicted with signals of economic strength and left no real clue as to the Federal Reserve's next move on interest rates.
The Dow Jones industrial average rose 9.68, or 0.09 percent, to 11,279.97.
The latest report on the housing sector showed new home sales tumbling 10.5 percent in February, according to the Commerce Department — the biggest one-month drop in nine years. With slowing housing demand, Wall Street felt that would make it easier for the Fed to stop raising rates soon.
However, a surge in big-ticket factory orders raised questions about whether demand would hold steady, possibly increasing pricing pressure and the chance for higher inflation. The Fed meets Monday and Tuesday, and is expected to raise the nation's benchmark rate by a quarter percentage point to 4.75 percent.
While questions remain as to how many more rate hikes the Fed will implement, analysts believe stocks still have room to move higher, thanks to a decent economy and the chance for another quarter of strong corporate earnings.
"The economic data points to the Fed stopping (rate hikes) sooner rather than later, and that's encouraging," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "Combined with the fact that you haven't had a lot of negative pre-announcements on first-quarter earnings, this is a decent environment for equities."
Broader stock indicators were higher as well. The Standard & Poor's 500 index added 1.28, or 0.1 percent, to 1,302.95, and the Nasdaq composite index climbed 12.67, or 0.55 percent, to 2,312.82.
Bonds surged after the previous session's selloff, with the yield on the benchmark 10-year Treasury note sliding to 4.66 percent from 4.74 percent late Thursday. The dollar fell against most major currencies, while gold prices moved higher.
Crude oil prices vacillated after rising more than $2 per barrel in the previous session. A barrel of light crude was quoted at $64.27, up 36 cents, on the New York Mercantile Exchange, after climbing past $64 per barrel earlier in the session.
Stocks opened flat as orders for durable goods — big-ticket items designed to last at least three years — climbed 2.6 percent in February, the biggest jump in three months, according to the Commerce Department. Investors worried that the report signaled resurgent economic growth that could encourage further interest rate hikes.
"After all this data, where the Fed ends is still a toss-up, and that's weighing on the stock market," said Bryan Piskorowski, market analyst at Wachovia Securities. "But looking at the big picture, the Dow's up 5 percent for the year, the other indexes are up, and it's been a relatively successful quarter."
Despite volatile trading and a new five-year high for the Dow on Wednesday, stocks finished the week mixed. The Dow was nearly flat for the week, up just 0.32 points, while the S&P fell 0.33 percent and the Nasdaq climbed 0.27 percent.
In corporate news, Lucent Technologies Inc. (LU), consistently one of the most active stocks on the New York Stock Exchange, climbed 24 cents, or 8.5 percent, to $3.06 after the company said it was in talks with French telecom equipment maker Alcatel SA about a possible merger. Alcatel added 25 cents to $15.70.
Google Inc. (GOOG) saw strong buying volume after Standard & Poor's announced it would be included in the S&P 500, prompting index funds to buy up the stock. Google, which will replace soon-to-be acquired Burlington Resources Inc. on the index, surged $23.91, or 7 percent, to $365.80.
Palm Inc. slipped 3 cents to $20.11 after the handheld computer maker posted quarterly profits nearly double those of a year ago, beating Wall Street profit forecasts by 3 cents per share.
Also in the tech sector, Microsoft Corp. (MSFT) announced that the latest version of its ubiquitous Office software would be available in October. Shares of Microsoft, which tumbled this week after it postponed the release of its latest Windows operating system, added 16 cents to $27.01.
Advancing issues outnumbered decliners by nearly 3 to 2 on the NYSE, where volume came to 1.49 billion shares, compared with 1.46 billion traded Thursday.
The Russell 2000 index of smaller companies rose 4.83, or 0.65 percent, to 752.43.
Overseas, Japan's Nikkei stock average rose 0.43 percent. In Europe, Britain's FTSE 100 was up 0.77 percent, France's CAC-40 climbed 0.46 percent for the session, and Germany's DAX index gained 0.44 percent in late trading.