NEW YORK — Stocks ended an erratic session with a slender gain Wednesday as rising commodities prices offset disappointment over an unexpected drop in home sales.
Gains in commodities drove the shares of energy and materials-producing companies higher, lending support to the overall stock market. Gold, oil and other commodities rose as the dollar dropped.
The dollar snapped a fourday winning streak as the latest economic data reinforced investors’ belief that the recovery will be slow.
The Commerce Department said sales of new homes fell 11.3 percent in November to their lowest level since March.The report indicated how reliant Americans have been on government assistance.
The housing disappointment followed news that personal spending and income rose in November.
Stock trading has been choppy over the past few weeks as investors’ optimism about the recovery surged and then ebbed. On Monday, the market rallied as corporate mergers raised investors’ confidence. Wednesday’s trading showed how uncertain investors really are.
Volume was light as investors closed up shop ahead of Christmas. The market will be open a half-day today and closed Friday.
Those still trading aren’t making any major moves as the year winds to a close. The Standard & Poor’s 500 index is now up 24.1 percent for the year.
“People are not doing any new trading,” said Benny Lorenzo, chief executive of New York-based Kaufman Brothers. “They are just holding on to their gains for the year.”
The Dow Jones industrial average rose 1.51, or 0.01 percent, to 10,466.44. The Standard & Poor’s 500 index rose 2.57, or 0.2 percent, to 1,120.59, while the Nasdaq composite index gained 16.97, or 0.8 percent, to 2,269.64.
The ICE Futures U.S. dollar index, which measures the dollar against other currencies, fell 0.5 percent. The decline in the dollar makes commodities cheaper for foreign buyers. Oil surged more than 3 percent,rising $2.27 to $76.67 a barrel on the New York Mercantile Exchange. Gold prices also rose.
The cost of buying a 10-year Treasury note to lock in yearly gains just above 3.5 percent does not provide as much value as stocks whose gains could be sharply higher, he said. Gains on Treasury notes could be further eroded if inflation starts to pick up as the economy recovers.
Three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume was 3.2 billion shares, down from 3.7 billion Tuesday.
Trading volume on the New York Stock Exchange has been especially light throughout the month, which can exaggerate price swings.
Business, Pages 22 on 12/24/2009