Stocks Pare Gains After Housing Data

The Commerce Department report that new home sales fell 9 percent from October to a seasonally adjusted annual rate of 647,000 stirred investor concerns that consumers worried about falling housing prices could further slow the nation's economic growth.

The market had shown early gains after a pullback Thursday that followed the assassination of Pakistani opposition leader Benazir Bhutto and a weak reading on big-ticket manufactured items. The major indexes each lost more than 1 percent, including the Dow Jones industrial average, which dropped nearly 200 points.

While stocks came off their highs Friday amid concerns about housing, the major indexes still managed to show modest gains. The Chicago purchasing managers' index perhaps helped buoy investor sentiment after registering a stronger-than-expected increase for December manufacturing activity in the Midwest.

Wall Street is closely following the economic data to try to determine whether weakness in the housing and financial sectors is undercutting the overall economy, possibly leading to a recession.

In midmorning trading, the Dow Jones industrial average rose 26.17, or 0.20 percent, to 13,385.78. The Dow had risen more than 91 points before the arrival of the housing data.

Broader stock indicators also rose. The Standard & Poor's 500 index increased 4.52, or 0.31 percent, to 1,480.79, and the Nasdaq composite index rose 10.40, or 0.39 percent, to 2,687.19.

Bond prices rose. The yield on the 10-year Treasury note, which moves opposite its price, fell to 4.12 percent from 4.19 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude moved up $1.07 to $97.69 per barrel on the New York Mercantile Exchange. The rise in recent days has renewed talk of the psychological benchmark of $100. Oil saw its peak of $99.29 on Nov. 21.

With Friday marking Wall Street's second-to-last trading session of the year, many investors were likely looking to square their positions ahead of the new year. Many market veterans discount the moves seen in the final weeks of the year when thin volume can exaggerate the market's moves.