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CNBC ON DIGG

Stocks End Flat as Investors Take Breather

Published: Wednesday, 26 Aug 2009 | 5:17 PM ET

Text Size

By: Cindy Perman
Writer

Stocks ended flat Wednesday as investors shrugged off solid demand from today's five-year Treasury auction and some encouraging economic reports.

The Dow Jones Industrial Average squeaked out a 4-point gain, but it was enough to extend the Dow's winning streak to seven straight sessions, in which it's gained 4.5 percent.

The S&P 500 and Nasdaq gained less than half a point each.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

All three indexes are now at their highest levels since last fall.

The Treasury auctioned off $39 billion in five-year notes today. The high yield was 2.494 percent and the bid-to-cover ratio was 2.51. This came after a $42 billion auction of two-year notes yesterday, which was met with mediocre demand. Still to come, $28 billion in seven-year notes tomorrow.

But investors took a breather after the Dow logged its sixth straight gain Tuesday, finishing at its highest level since November. The S&P 500 and Nasdaq finished at their highest since October.

New-home sales shot up 9.6 percent to a 433,000 annual pace in July, after a 9.1-percent increase in June. The number blew past economists' expectation for a 1.6-percent increase.

Homebuilder stocks soared, with Hovnanian [HOV Loading... () ] up more than 10 percent and Beazer Homes [BZH Loading... () ] up more than 5 percent.

This report came after a morning report showed mortgage applications jumped 7.5 percent and Tuesday's report that home prices rose 1.4 percent in June from May.

FOR INVESTORS

The morning's other big economic news was orders for durable goods, which are big-ticket items such as cars and appliances. Durable-goods orders posted their largest jump in two years but the rise was mainly fueled by the volatile transportation sector. Excluding transportation, orders rose 0.8 percent, just shy of the 0.9-percent expected.

Excluding transportation goods, orders rose 0.8 percent. That was the third straight increase, but just below analysts' expectations of a 0.9 percent rise.

Across the pond, German business confidence jumped to its highest since last September, according to the Ifo business-climate index.

The morning began with news of Senator Ted Kennedy's death at age 77. Kennedy died after a long battle with a brain tumor, having served in the Senate since 1962, making him the third longest serving senator in history.

Kennedy was considered one of President Obama's major allies in his health-care reform initiative, and the President issued a statement saying he and First Lady Michelle Obama were "heartbroken" to learn of Kennedy's death.

Fannie Mae [FNM Loading... () ] and Freddie Mac [FRE Loading... () ] started higher but ended lower, with Freddie down 1.5 percent and Fannie off 0.5 percent.

In August's quiet trading, Bank of America, Citi, Fannie and Freddie have accounting for an extraordinary amount of volume, which traders have dubbed a "dash for trash."

American depositary shares of Nokia [NOK Loading... () ] rose 4 percent after the Finnish handset maker said it plans to take on Apple [AAPL Loading... () ] in the smartphone arena with a bet on Linux software.

Caterpillar [CAT Loading... () ], Boeing [BA Loading... () ] and Alcoa [AA Loading... () ] were among the biggest drags on the Dow. Industrials took a hit after China announced plans to curb overcapacity among steel and cement producers.

Toyota [TM Loading... () ] will cut production in response to slumping sales, with cuts possibly reaching 700,000 vehicles, or about 7 percent of the company's global production capacity.

Williams-Sonoma [WSM Loading... () ] jumped 11 percent after the housewares chain posted a surprise profit.

Volume was light, with 1.02 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 8 to 7.

—Reuters contributed to this article.

Still to Come:

THURSDAY: 2nd reading on Q2 GDP; weekly jobless claims; Kansas City Fed report; Fed's Bullard speaks; seven-year auction; earnings from American Eagle, Toll Brothers and Dell
FRIDAY: Personal income and spending; consumer sentiment; Earnings from Tiffany

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