Wall Street trades flat as bond yields decline

NEW YORK » Wall Street eked out small gains yesterday, as investors found solace in declining Treasury yields but remained subdued after Best Buy Co.'s lackluster profit forecast and a drop in new home construction.

The 10-year Treasury note's yield, which hit five-year highs last week, fell to 5.09 percent from 5.14 percent late Monday -- alleviating some worries about high rates slowing down corporate dealmaking and hurting the already sluggish housing market.

Also lifting the stock market was a rise in General Electric Co.'s stock, after its unit GE Energy Financial Services bought a stake in Regency Energy Partners LP, a natural gas processor and distributor, from HM Capital Partners LLC for $603 million.

The major stock indexes wavered throughout the day on concerns about flagging consumer spending when electronics chain Best Buy lowered its fiscal 2008 profit forecast, and after U.S. Commerce Department data showed construction of new homes and apartments fell 2.1 percent last month. The dip, which followed small increases in April and March, was expected and came alongside a 3 percent rise in May permit applications.

"After having a full plate of information to digest last week, we don't have a lot of new incremental news. Today's housing starts was not startling in either direction," said Alan Gayle, senior investment strategist and director of asset allocation for Trusco Capital Management. "What's encouraging is the sanity that's returned to the bond market."

The Dow Jones industrial average rose 22.44, or 0.16 percent, to 13,635.42. The blue-chip index was buoyed largely by GE, which rose $1.22, or 3.2 percent, to $39.29.

Broader stock indicators also edged higher. The Standard & Poor's 500 index rose 2.65, or 0.17 percent, to 1,533.70, and the Nasdaq composite index rose 0.16, or 0.01 percent, to 2,626.76.

Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where consolidated volume came to 2.80 billion shares, up from 2.45 billion Monday.

The Russell 2000 index of smaller companies rose 2.06, or less than 0.24 percent, to 848.34.

Bonds rose after the weak housing data. While Wall Street has largely tried to look past weakness in the housing market as old news, any sign that the fallout isn't contained and could taint other areas of the economy could alarm investors.

The dollar, which had strengthened in recent weeks as bond yields advanced, was lower against other major currencies. Gold prices rose.

Best Buy reported its fiscal first-quarter earnings fell 18 percent amid weak profits in China and increased sales of lower-margin products such as notebook computers. The stock fell $2.83, or 5.9 percent, to $45.18.

Airline stocks lifted after an analyst upgrade of US Airways Group Inc. and an announcement from United Airlines that it is hiring pilots for the first time since 2001.

US Airways rose $1.85, or 6.8 percent, to $29.14.

UAL Corp., the parent company of United Airlines, rose $2.60, or 7.4 percent, to $37.93. Other airlines followed, with Continental Airlines Inc. rising 90 cents, or 2.7 percent, to $33.80; and AMR Corp. climbing 73 cents, or 2.9 percent, to $26.29.