Housing data fails to revive Wall Street

NEW YORK » Wall Street closed slightly lower in erratic trading yesterday as investors, uneasy about the credit markets and record-high oil prices, took little solace from reports on new home sales and durable goods orders.

The U.S. Commerce Department said sales of new homes rose 4.8 percent in September from August's levels. The market initially popped on the data, as economists had predicted a decline. But it eventually pulled back because the sales increase was due to a big downward revision in August's decline, and that homebuilders had offered discounts in September to move inventory.

"The sad part is, even with the discounts, we still have inventory overhang. And that's a problem," said Michael Strauss, chief economist at Commonfund.

Another report showed that orders of big-ticket items, one gauge of business spending, fell 1.7 percent in September, following August's 5.3 percent drop. The data drew close attention by Wall Street as investors look for clues to determine if the Federal Reserve will lower rates at its meeting next week.

Meanwhile, investors also had to contend with higher energy prices -- crude oil spiked to an all-time high of $90.60 a barrel before settling slightly lower -- and credit worries continued to dog the market. Speculation that insurer American International Group Inc. might suffer credit costs weighed on the Dow Jones industrial average, which later rebounded from its lows.

The Dow fell 3.33, or 0.02 percent, to 13,671.92 after changing direction several times. The blue chip index was briefly down more than 100 points.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 1.48, or 0.10 percent, to 1,514.40, while the Nasdaq composite index fell 23.90, or 0.86 percent, to 2,750.86. The Russell 2000 index of smaller companies fell 4.74, or 0.58 percent, to 806.11.

Declining issues outnumbered advancers by 3 to 2 on the New York Stock Exchange, where volume came to 1.49 billion shares, up from 1.31 billion Wednesday.

Treasury bond prices stalled as investors moved in and out of the stock market. The yield on the benchmark 10-year Treasury note, which moves inversely to the price, was unchanged at 4.35 percent from its close Wednesday.

The dollar fell against most other major currencies, except the yen; gold prices rose.

Investors appeared unsure both about the direction of the economy and whether the central bank will lower interest rates again.

Many investors seem to believe the Fed will cut rates several times over the next six months to keep the economy moving forward, said Paul Nolte, director of investments at Hinsdale Associates.

However, there does remain some doubt. Commonfund's Strauss said "the Fed may not be as aggressive as the market is hoping. "We're still going to get a decent third-quarter GDP number, and there's pressure from the energy complex that we're concerned about," he said.

Crude futures rose $3.36 to close at $90.46 a barrel on the New York Mercantile Exchange due to concerns about OPEC oil ministers not meeting demand.