NEW YORK — A record low in housing construction has investors doubting the economy again.
Stocks closed narrowly mixed in light trading Tuesday as the surprise drop in construction and a cautious outlook from retailer Home Depot Inc. led energy and utility stocks to pare gains.
Construction of multiple-unit homes and apartments fell 12.8 percent last month to the lowest pace on records going back a half-century, the Commerce Department said.
The report did contain some positive signs, including a rebound in single-family construction that partly offset a drop in apartment construction. And a sharp pullback in construction is necessary to rid the housing market of excess inventory, many analysts pointed out.
Wall Street has been trying to get a read on the housing market for months as investors look for solid signs the economy is recovering. Stocks surged more than 3 percent on May 4 following unexpected increases in pending home sales and construction spending. But a big inventory of unsold homes and record foreclosures are swallowing much of the demand, making it hard for prices to stabilize.
“The housing number on the surface was horrible,” said Alan Valdes, vice president at Hilliard Lyons in New York.
But he said the whittling away of inventory will help prices eventually.
Although the construction figure was seen as a setback, it also did not set off heavy selling. Valdes noted that the light trading volume ahead of the long Memorial Day weekend meant the market was likely to drift barring any news that could change investors’ mood.
The Dow Jones industrial average fell 29.23, or 0.3 percent, to 8,474.85.
Broader stock indicators were mixed. The Standard & Poor’s 500 index fell 1.58, or 0.2 percent, to 908.13, while the Nasdaq composite index rose 2.18, or 0.1 percent, to 1,734.54.
About three stocks rose for every two that fell on the New York Stock Exchange, where consolidated volume came to 5.44 billion shares, down from 5.49 billion Monday.
David Kelly, chief market strategist at JPMorgan Funds, said the drop in expectations for volatility and the market’s relatively calm response to bad economic news in light trading is a departure from only months ago, when stocks probably would have tumbled sharply.
“The market was assuming the economy would never come around. Even though we are waiting for a turnaround, this certainly is indicative of an economy that is stabilizing,” he said.
Kelly added that every day without another proverbial shoe dropping helps traders build confidence.
“Every shoeless day is a good day,” he said.
