The Commerce Department reported Thursday that sales of new single-family U.S. homes fell 8.3% in August to a 795,000 annual sales pace, its slowest rate in over seven years, while the inventory of homes dropped.
A rise in crude oil prices cushioned the market as shares of energy companies, including Exxon Mobil , headed higher, but shares of financial services companies dragged on the market.
CNBC reported Thursday that, contrary to reports from Wednesday afternoon, investment bank Bear Stearns is not holding talks with potential suitors to sell a stake in the company.
Shares of Bear Stearns closed 1.5% lower at $121.15.
Adding to housing market concerns was KB Home , which reported a quarterly sales decline of 32%, reflecting the swelling supply of homes and tighter standards in the mortgage market that kept potential buyers on the sidelines.
In the tech sector, Microsoftunveiled a retooled Web search service that aims to deliver more relevant results and combines text, video and other information onto a single page, in a bid to fight rival Google.
Bed Bath & Beyond posted a slightly higher quarterly profit after markets closed on Wednesday, citing increased sales and a one-time tax benefit and said its board of directors approved a $1 billion share buyback program. The company reported earnings of 52 cents a share, meeting Wall Street forecasts.
In other economic news, healthy business investment helped the U.S. economy grow at a revised 3.8% annual rate in the second quarter.
Bond prices rose, sending yields lower.
Asian stocks closed higher with banking and technology stocks leading the gains, while European shares joined the rally, trading higher.