NEW YORK – Wall Street managed a razor-thin gain Thursday as investors sifted through data that pointed to stable interest rates but also suggested the economy has moderated more than expected.
The Dow Jones industrial average picked up 6.56, or 0.06 percent, to 11,304.46.
Broader stock indicators were narrowly higher. The Standard & Poor's 500 index added 3.07, or 0.24 percent, to 1,296.06, and the Nasdaq composite index rose 2.45, or 0.11 percent, to 2,137.11.
The market was down for much of the day after reports of sluggish home sales and durable goods orders, but stocks then turned higher at mid-afternoon. Investors have been struggling to rebound after losses this week on concerns the Federal Reserve's campaign of rate hikes has hurt the economy and that a soft landing might be harder to achieve.
The data bolstered views the Fed will remain on the sidelines for the time being. However, slowing economic indicators also mean consumer spending is softening — a key factor that drives the economy and corporate earnings.
"Looking beyond just the numbers the trend is obviously toward slowing housing demand," said Elisabeth Denison, a U.S. economist with the securities firm Dresdner Kleinwort. "The Fed has been banking on this to help cap inflation as we go through the year, but it also calls into question that maybe things have gone too far."
The Commerce Department reported sales of new homes fell 4.3 percent in July, the biggest drop since February. The report came one day after the National Association of Realtors reported sales of previously owned homes had a bigger than expected decline, prompting a market selloff.
Meanwhile, the department said orders to U.S. factories for big-ticket manufactured goods fell 2.4 percent in July as demand for aircraft and automobiles weakened. And the Labor Department said the number of Americans filing claims for unemployment benefits last week slipped by 1,000 to 313,000.
Bonds were flat, with the yield on the benchmark 10-year Treasury note at 4.80 percent, down from 4.81 percent Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Oil prices rose, with light sweet crude for October delivery up 60 cents at $72.36 a barrel on the New York Mercantile Exchange. Crude has been affected this week by continued uncertainty in the Middle East, and government data Wednesday that showed rising supplies of gasoline as refiners increased output.
One portfolio manager said the stock market's earlier drop had more to do with light trading and a hair-trigger reaction by investors looking for direction.
"The summer is a seasonally weak time for the market, and we're getting into the tail end of that," said Art Nunes, portfolio manager of the IMS Strategic Allocation Fund in Bellevue, Wash. "The markets are weaker today, but it's more a case of the summer doldrums than any major factor. As we approach the fall, people will come back to work and the volume will pick up."
Retailers, depressed over concerns that consumer spending has dropped, led the markets lower throughout the session. Chico's FAS Inc. (CHS) plunged $6.13, or 25 percent, to $17.95 after the women's apparel chain lowered its outlook for the third and fourth quarters.
Williams-Sonoma Inc. (WSM) dropped $2.71, or 8.3 percent, to $29.89 after the housewares retailer slashed its outlook for the rest of the year due to disappointing sales at its Pottery Barn chain.
Rite Aid Corp. (RAD) agreed to buy U.S. drug stores from Canada's Jean Coutu Group Inc. in a $2.55 billion cash and stock deal. Rite Aid slipped 32 cents, or 6.8 percent, to $4.36. The deal makes Ride Aid the largest drugstore chain operator on the East Coast, trailing Walgreen and CVS nationally.
After hovering near 52-week lows, and being punished after Wednesday's release of existing home sales numbers, homebuilders staged a rebound. Pulte Homes Inc.(PHM), the nation's largest homebuilder, rose $1.16, or 4.1 percent, to $29.25. Toll Brothers Inc. (TOL) added 87 cents, or 3.5 percent, to $25.42.
Apple Computer Inc. (AAPL) edged up 50 cents to $67.81 despite announcing it will recall 1.1 million laptop batteries supplied by Sony Corp. (SNE) because of a fire hazard. The same batteries supplied by Sony also prompted Dell Inc. (DELL) to implement a similar recall. Sony's U.S. shares dropped $1.16, or 2.6 percent, to $43.26.
Ford Motor Co. (F), the nation's second-largest automaker, closed flat at $7.76, despite reports the Ford family is considering taking the company private to bolster restructuring efforts.
With criminal charges being dropped over multibillion-dollar accounting irregularities, Fannie Mae (FNM) — the government sponsored mortgage lending giant — picked up $2.36, or 4.8 percent, to $51.53.
Advancing shares barely outnumbered decliners on the New York Stock Exchange, where preliminary consolidated volume came to 2.04 billion, compared to 2.02 billion traded at the same point Wednesday.
The Russell 2000 index of smaller companies rose 0.30, or 0.04 percent, to 698.72.
Overseas, Japan's Nikkei stock average closed up 1.25 percent. At the close, Britain's FTSE 100 was up 0.16 percent, Germany's DAX index added 0.67 percent, and France's CAC-40 rose 0.59 percent.