New York – Wall Street gave up a huge advance and closed mixed Tuesday after an unimpressive snapshot of the housing market unsettled investors. The Dow Jones industrials, which surpassed 13,400 early in the session, slipped back but still eked out a record close.
Investors who initially bought enthusiastically following a tame reading on inflation decided to cash in some of their gains after the National Association of Home Builders said its housing index dropped to 30 from 33 in April, indicating a deteriorating housing outlook.
The stock market followed a months-long pattern of rising on upbeat economic data only to give back gains on the latest report of a decline in housing. The day’s movement also followed the recent pattern of blue-chip stocks performing better than their smaller counterparts.
“We’ve got a real dichotomy going on here,” said Stephen Massocca, president of Pacific Growth Equities. “Big corporate America, the staid and stodgy companies, (is) doing well. They’re going up today. Stocks that are riskier, stocks that are smaller, stocks in the emerging- market vein or technology vein, those are being sold.”
The Dow had surged more than 130 points by midday trading, breezing past 13,400 after the inflation data raised hopes that the Federal Reserve might cut interest rates this year. The Labor Department said prices paid by consumers rose less than expected in April and indicated that inflation may be easing as the economy continues to cool. The Consumer Price Index rose 0.4 percent after rising 0.6 percent in March, while core prices – which exclude food and energy – rose 0.2 percent after a 0.1 percent gain.
The Dow rose 37.06, or 0.28 percent, to 13,383.84, after reaching a new trading high of 13,481.60. The modest climb nudged the blue-chip index to its 22nd record close this year.
Broader indexes slipped. The Standard & Poor’s 500 fell 1.96, or 0.13 percent, to 1,501.19. The technology-dominated Nasdaq composite index fell 21.15, or 0.83 percent, to 2,525.29.
Since the Dow broke through 12,000 for the first time in October, it has become almost routine for the blue-chip index to set records. The overall market advance has also lifted the S&P 500 near its record close of 1,527.46, reached in the spring of 2000. However, the Nasdaq remains well off its closing high of 5,048.62, also reached during the peak of the dot-com boom; the index was overinflated by investors rushing to buy high- tech stocks.
