Stocks finish higher after erratic session
NEW YORK » Stocks finished another erratic session modestly higher yesterday after durable goods and home sales data helped ease investors' anxiety about whether the Federal Reserve will continue raising interest rates.
A sharp drop in April orders for big-ticket manufactured items drove hopes that the Fed has lifted rates enough to slow a robust economy. And while the Commerce Department also reported an unexpected jump in new home sales last month, overall housing demand continues to fall gradually after five years of record sales.
But recent volatility on Wall Street has shown that investors remain on edge about inflation and the chance of higher lending rates, and any hint of rising prices or accelerating growth has made traders wary of leaving too much money in the market. The major indexes teetered in negative territory for most of the afternoon before a late-day rally lifted stocks from their losses.
Wall Street is trying to recover from two weeks of steep declines, with the Dow Jones industrial falling about 5 percent from a six-year high on May 10. Stocks showed some signs of stabilizing this week but continue to wobble: Worries about the impact of high energy prices triggered a late selloff Tuesday, erasing an earlier advance.
Still, analysts say the up-and-down trading is likely to continue as bargain hunters take advantage of the recent correction to lock in short-term profits while uncertainty over the economy and interest rates lingers.
"I think people want to move stocks higher. They're trying to take advantage of bargains that have been created over the last week or two," said Jack Caffrey, equity strategist for JPMorgan Private Bank.
At the close, the Dow added 18.97, or 0.17 percent, to 11,117.32, after swinging nearly 70 points in both directions.
Broader stock indicators turned higher in the last hour of activity. The Standard & Poor's 500 index rose 1.99, or 0.16 percent, to 1,258.57, and the Nasdaq composite index gained 10.41, or 0.48 percent, to 2,169.17.
Despite the indexes' advance, declining issues led advancers by more than 9 to 7 on the New York Stock Exchange. The imbalance reflected investors' pessimism toward stocks as Wall Street intensifies its recent trend of selling, said Chris Johnson, manager of quantitative analysis for Schaeffer's Investment Research.
"Honestly, until we get the next rate meeting out of the way and we see the verbiage from that, investors are going to remain on the edge," Johnson said. "Right now, this type of market is not a good place to be."