NEW YORK - Wall Street closed out a volatile week with a mixed performance yesterday after a pair of economic reports dashed hopes for an interest rate cut anytime soon. The major indexes were down for the week.
Stocks found some late-day strength as investors sought bargains after a two-day pullback that erased most of their 2007 gains. The market had its worst performance so far this year, despite optimism about earnings earlier in the week that lifted the Dow Jones industrial average to its fourth record high of the year.
Strong results from Microsoft Corp. helped lift technology stocks, while heavy-machinery-maker Caterpillar Inc. lent some support to the Dow Jones industrials. However, those gains were offset by economic reports that raised concerns about interest rates.
The Commerce Department said new-home sales rose 4.8 percent in December, well above economists' projections and a sign that the slumping housing market might have bottomed out. The department also said orders to U.S. factories for big-ticket manufactured goods rose in December by the largest amount in three months, led by demand for commercial aircraft.
Investors had been holding on to hopes that central bankers might cut rates in the first half of the year. However, a steady stream of positive economic data like yesterday's is making that unlikely and instead raising the possibility that the Federal Reserve might resume its campaign of rate hikes that ended in August. The Fed's Open Market Committee is scheduled to meet next week.
"The biggest driver is concern the Fed might see more reasons to raise rates than to lower," said Arthur Hogan, chief market analyst at Jefferies & Co.
The Dow Jones industrial average fell 15.54, or 0.12 percent, to 12,487.02.
Broader stock indicators were mixed. The Standard & Poor's 500 index was down 1.72, or 0.12 percent, at 1,422.18, and the Nasdaq composite index rose 1.25, or 0.05 percent, to 2,435.49.
Long-term bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.88 percent, compared with late Thursday.
Yields for shorter-term bonds rose during the session. The market was hit Thursday by a lackluster report on sales of existing homes, which sent long-term interest rates sharply higher.
The dollar was mixed against other major currencies, while gold prices fell.
Oil prices rose after a steep decline in the previous session because of doubts that OPEC members were making the production cuts promised last year.
The price of a barrel of light, sweet crude rose $1.19, to $55.42, on the New York Mercantile Exchange.
Tank tracker Lloyds Marine Intelligence Unit said yesterday that oil exports from the Organization of Petroleum Exporting Countries fell to less than 23 million barrels a day in December from just under 24 million barrels a day in November, according to a Dow Jones newswire report.
Saudi Arabia, the world's largest crude-oil producer and exporter, was the quickest to implement OPEC's production cuts; its exports in December were 1.1 million barrels a day lower than before OPEC's October call for production cuts.
"The market has been concerned about the rate of OPEC compliance. Yesterday [Thursday], it was worried compliance was bad. Today [Friday], it's worried that it's good," said Tim Evans, an energy analyst at Citigroup Global Markets. "Overall, the larger story is that OPEC production is declining."
OPEC said it would begin cutting production 1.2 million barrels a day in November, but some traders speculated that cartel members were not complying. The cartel said late last year that it planned to cut production an additional 500,000 barrels a day starting Feb. 1.
On Thursday, tanker tracker Oil Movements said it expected exports from OPEC to rise in mid-February. The news sent oil prices down to settle at $54.23 Thursday, after rising as high as $55.90 during earlier trading.
"The market has overcome that tracker report," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.