Stocks inch higher

NEW YORK (CNNMoney.com) -- Stocks struggled higher Thursday morning as investors mulled a big drop in new home sales, a weak read on GDP growth, rising oil prices and some negative corporate news.

The Dow Jones industrial average (Charts) added a few points around 2-1/2 hours into the session, after ending the previous session 122 points away from its all-time high above 14,000, which it hit in July.

The broader S&P 500 (Charts) index and the tech-fueled Nasdaq composite (Charts) also both added a few points.

All three major gauges had risen in the early going, as investors continued to show enthusiasm about the prospect of Bear Stearns selling a minority stake in the company.

But investors struggled to remain positive after the release of the new home sales report.

New home sales fell to a 795,000 annual unit rate in August, the lowest level in seven years, from an 867,000 unit rate in July. It was a steeper-than-expected decline.

"The weak report wasn't surprising," said Dean Barber, president at Barber Financial Group. "The trend in the sector isn't going to correct itself until late next year."

However, he said that the report in combination with the morning's weaker-than-expected revision of second-quarter GDP growth was adding to questions about how consumer spending is going to hold up.

GDP growth was revised down to 3.8 percent in the second quarter from a previous read of 4.0 percent. Economists surveyed by Briefing.com thought it would be revised down to 3.9 percent.

A separate report Thursday showed a surprise drop in weekly jobless claims last week.

Friday's personal income and spending reports will be the next indicators of how the consumer - whose spending fuels more than two-thirds of economic growth - is holding up.

As long as consumer spending continues to accelerate, stocks should be able to keep pushing higher, Barber said. "Short-term, we remain bullish about the market."

Stocks rose Wednesday after General Motors (Charts, Fortune 500) and its workers' union reached a deal that ended a two-day strike. Also boosting stocks: news that Bear Stearns (Charts, Fortune 500) is talking with Warren Buffett and other investors about buying a stake in the company.

The Bear Stearns news continued to be a support for the stock market Thursday, although the financial stocks were less responsive than they had been the previous day.

In corporate news, Microsoft (Charts, Fortune 500) said its Halo 3 video game racked up about $170 million in first day sales.

But other company news released Thursday was less positive. KB Home (Charts, Fortune 500) reported a steep third-quarter loss that was worse than what analysts were expecting. The homebuilder also warned that the housing market is likely to worsen through 2008.

Rite Aid (Charts, Fortune 500) reported a steeper fiscal second-quarter loss versus a year ago that was worse than what analysts were forecasting. The drug store chain also warned that it would post a bigger quarterly loss for fiscal-year 2007 than it had previously thought.

U.S. light crude oil for November delivery rose $1.29 to $81.59 a barrel on the New York Mercantile Exchange.

Last week, the October contract settled at a record high of $83.32. However, the record price remains below inflation-adjusted highs hit in the early 1980s, which would be equal to at least $95 a barrel today.

Treasury prices rose, lowering the yield on the 10-year note to 4.60 percent from 4.62 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell to another record low versus the euro and also dipped versus other major currencies.

COMEX gold for December delivery rose $2.50 to $738 an ounce.