Strong economic reports leave investors unfazed

Stocks finished a choppy day of trading Wednesday mostly higher following positive reports on home sales and factory orders..

The Dow Jones industrials rose for the seventh straight day, marking another new high for the year. All the major stock indicators finished in positive territory, but the gains were minuscule.

The Dow rose 4.23 points, or 0.04%, to 9,543.52. The Standard & Poor's 500 index rose 0.12, or 0.01%, to 1,028.12, and the Nasdaq composite index rose 0.20, or 0.01%, to 2,024.43.

An increasingly cautious mood has gripped the market in recent days, following a period of fervid buying this spring and summer that sent stocks up more than 45% since early March. While economic data is improving, investors are now questioning whether the market can go much higher without clear evidence of economic growth.

"The general consensus seems as though the market is ripe for some sort of pullback at some point," said Andrew Frankel, co-president of Stuart Frankel & Co. "We seem to be floating up on air."

With trading volume and news flow tapering down amid Wall Street's annual summer slowdown, analysts say there are few near-term catalysts that could spur the market higher.

Stocks seesawed without a clear direction most of the day despite a Commerce Department report that said new home sales rose rose 9.6% in July for the fourth straight monthly increase. Sales rose to 433,000, the strongest pace since September and well above the 390,000 figure economists expected.

The latest sign of improvement in housing didn't do much to impress investors, however, who have already factored in a recovery in the long-suffering home industry. Some of the latest gains can also be attributed to a federal tax credit for first-time home owners currently set to expire in November, and the industry has been pressing Congress to extend it.

Separately, the Commerce Department said orders for goods expected to last at least three years rose 4.9% in July— the biggest jump in two years and more than the 3% increase economists had expected.

However the overall increase was driven by a surge in orders for transportation equipment, which benefited from the government's recently expired Cash for Clunkers program that drove thousands of people to trade in older vehicles for new cars. Excluding transportation goods, orders rose 0.8%, just short of analysts' expectations.

Declining stocks outnumbered advancers by about 3-to-2 on the New York Stock Exchange, where volume came to a relatively light 653.4 million shares, down from 730.8 million shares at the same time on Tuesday.

In other trading, the Russell 2000 index of smaller companies slipped 0.80, or 0.1%, to 584.02.

Shares of homebuilders surged for a second day after the housing data showed the supply of new homes on the market shrank to the lowest level since April 2007. If supply is decreasing, builders may need to ramp up production.

Hovnanian Enterprises rose 43 cents, or 9.4%, to $5.00, tacking on to its 6.5% jump the day before. Lennar rose 61 cents, or 4.1%, to $15581. Both stocks are at their highest levels since October.

Retail stocks were mostly higher after a handful of upbeat earnings reports. Shares of Dollar Tree rose $2.23, or 4.6%, to $50.13 after the company posted a 51% jump in its second-quarter profit as its deeply discounted goods attracted cash-strapped consumers.

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