Blue chips fight back
Dow recovers, Nasdaq struggles as investors digest weak home building, lower oil and Altria news.
NEW YORK (CNNMoney.com) -- Blue-chip stocks struggled to crawl out of the red Friday afternoon after lower oil prices offset the morning's weak reading on housing.
The Dow Jones industrial average (up 12.40 to 12,318.22, Charts) rose 0.2 percent with an hour left in the session after closing at a third straight record high Thursday - the 17th new high since Oct. 3.
The broader S&P 500 (up 0.65 to 1,400.41, Charts) index hovered near unchanged after ending the previous session at a new six-year high.
The tech-fueled Nasdaq composite (down 4.78 to 2,444.28, Charts) lost about 0.2 percent but was off its lows after ending the previous session at its highest point since February 2001.
Stocks edged lower after a big drop in housing unnerved investors. But buyers returned in early afternoon as the consumer sector got a boost from Altria and lower oil prices.
Housing starts slumped 14.6 percent in October to a 6-1/2 year low, the government reported Friday, while building permits fell to the lowest pace in 9 years.
"Yes the news on housing continues to be dismal but it's being, to some extent, offset by the decline in energy prices," said Hugh Johnson, chairman of asset management company Johnson Illington Advisors.
Treasury bond prices rallied on the housing report, lowering the yield on the benchmark 10-year note to 4.60 percent from 4.66 percent late Thursday. Bond prices and yields move in opposite directions.
In recent days, the economic news has suggested that the Federal Reserve is unlikely to cut rates soon, after mild reads on inflation and strong regional manufacturing reports.
While bets that the Fed could start cutting rates next year should ultimately prove supportive to the market, after the recent rally, stocks were vulnerable Friday.
In corporate news, Altria (up $1.41 to $84.98, Charts) benefited from a U.S. Appeals Court decision to grant a permanent stay in the class action suit against light cigarettes. The stock rose about 1.5 percent, making it one of the Dow's top gainers.
Fellow Dow component Hewlett-Packard (down $0.44 to $39.69, Charts) reported higher earnings and revenue late Thursday, topping forecasts, and offered a bullish outlook for the current period. But investors seemed to take a 'sell the news' perspective and shares fell 1 percent in afternoon trading. (Full story).
Of the 30 stocks in the Dow, 16 rose and 14 fell.
Starbucks (down $2.39 to $37.04, Charts) sank 6 percent after the specialty coffee retailer reported lower profit late Thursday and issued a sales and earnings forecast in a range that could miss analysts' expectations.
A variety of technology shares slipped, with the chip sector hit the hardest. The Philadelphia Semiconductor (down 2.49 to 483.44, Charts) index, or the SOX, fell 0.5 percent.
In merger news, Johnson & Johnson (up $0.62 to $67.15, Charts) said it will buy heart device maker Conor Medsystems for around $1.4 billion in cash. Shares of JNJ gained close to 1 percent, while Conor (up $5.18 to $32.70, Charts) rallied 19 percent.
Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by nine to seven on volume of about 1.3 billion shares. On the Nasdaq, losers topped winners by about three to two on volume of 1.4 billion shares.
COMEX gold was little changed.
In currency trading, the dollar weakened versus the yen and the euro.