Wall Street closed barely higher on Thursday after mixed trading for much of the day, as investors digested data on home sales and durable goods orders that gave further indications of a slowing economy.
Trading was tentative and the Dow Jones Industrial Average and Nasdaq Composite both dipped in and out of negative territory throughout the day.
Shares in mortgage finance group Fannie Mae jumped on news that it would not be facing criminal charges for accounting irregularities and that the US Justice Department had ended its investigation of the company. Its shares gained 4.8 per cent to $51.53, its best day since January.
Online auction site Ebay dropped 4.5 per cent to $25.78 after Piper Jaffray cut its rating on the stock from “market perform” to “underperform”.
At the close, the S&P 500 was up 0.2 per cent, or 3.07 points, at 1,296.06, while the Nasdaq Composite was up 0.1 per cent, or 2.45 points, at 2,137.11. The Dow Jones Industrial Average was up 0.1 per cent, or 6.56 points, at 11,304.46.
Sales of existing homes fell by more than expected in July, bolstering the picture of a cooling US housing market and presaging further economic slowing. Durable goods orders data for July were mixed, although the headline number dropped by 2.4 per cent, more than had been forecast.
The sluggish durable goods figures precipitated a sell-off in heavy-industry stocks. Caterpillar tumbled 2.5 per cent to $65.50, while Joy Global, maker of farm and mining machinery, fell 2.6 per cent to $38.00.
Consumer stocks were the worst hit by the news of slowing home sales and the attendant risks they posed to consumer spending. Electronics retailer Circuit City sank 4 per cent to $22.78, while jewellery company Tiffany & Co lost 3.3 per cent to $30.80.
Subodh Kumar, chief investment strategist at CIBC World Markets, said the fall-back in consumer cyclical stocks hinted at a shift in the sectors that would lead the market.
“Going into 2005 and beyond, cyclicals have done well so the issue is, do we bottom fish, because they have dipped so much, or do we look for a change of leadership?” he said. “I think we should think in terms of a change in leadership.”
While consumer stocks slumped, healthcare made strong gains. UnitedHealth rose 3.1 per cent to $51.16 and Aetna gained 3.5 per cent to $37.66.
Clothes retailer Chico’s FAS sank 25.5 per cent to $17.95 after it issued guidance for the third and fourth quarters that was below analyst expectations.
Investors checked into hotel chain Wyndham Worldwide after it said it would receive $760m from its sale of real estate group Cendant and use the money to pay down debt. Shares in Wyndham rose 5.7 per cent to $27.88.
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