Stocks in mid-day muddle

NEW YORK (CNNMoney.com) -- Stocks struggled midday Thursday as a string of lackluster earnings reports and downbeat news in the manufacturing sector dampened any bounce from a housing report that some said could have been much worse.

The 30-share Dow Jones Industrial Average and the broader S&P 500 were little changed, while the tech-heavy Nasdaq fell 0.3 percent about two hours into the session.

The weak economic numbers started early on Thursday and continued through mid-morning.

Before the bell, the government said orders for durable goods fell unexpectedly by 1.7 percent in September. Analysts were looking for a gain of 1.5 percent, according to economists surveyed by Briefing.com. August orders were also revised lower.

In a separate report, the government said the number of jobless claims last week fell by 8,000 to 331,000, which was a smaller drop than expected.

Then at 10 AM new home sales came in slightly weaker than expected, although they showed a slight uptick from an August reading that was revised sharply lower to an 11-year low.

"The new homes sales number wasn't a disaster, that's helped a bit," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco.

On Wednesday, the National Association of Realtors reported that existing home sales posted its worst drop since the trade group started tracking that key measure in 1999.

One trader said the weak economic numbers does mean its nearly certain the Federal Reserve will cut interest rates when it meets next week, but that optimism was priced into the market yesterday.

"It's pretty impressive we're holding together here, given the rally in crude," Clark said.

Oil prices, already within $2 of a record high, rose $1.20 to $88.30 a barrel on the New York Mercantile Exchange after Lebanese troops fired on Israeli warplanes and Turkey continued shelling Kurdish positions in Northern Iraq, raising fears of a broader conflict in the Middle East.

Crude rose nearly $2 Wednesday as traders eyed declining crude stocks in the United States.

Clark added that if crude continues to rise and the dollar remains weak, it will hamper the Fed's ability to cut rates in the long term.

The dollar fell Thursday against the euro and yen.

News on the corporate front did little to help stocks.

No. 1 cable operator Comcast (Charts) reported earnings that met forecasts, cell phone maker Motorola (Charts, Fortune 500) reported a plunge in earnings that was a penny a share worse than forecast and Dow Chemical (Charts, Fortune 500), the nation's No. 1 chemical company, saw a bigger than forecast drop in earnings excluding special items.

One bit of positive news came from Microsoft.

On Wednesday, the software maker said it was making a $240 million investment in social networking site Facebook, beating out rivals Google and Yahoo. Microsoft also said it was expanding its advertising deal with the site.

Microsoft (Charts, Fortune 500), a Dow component, is also due to report results after the close Thursday, with analysts looking for an 11 percent gain in earnings.

In Asia, Hong Kong stocks finished the session higher, but China's benchmark index sank nearly 5 percent on worries that economic growth in China had peaked. Shares on Japan's Nikkei slipped 0.5 percent. After the close of trading there, Honda reported profit jumped 63 percent in the most recent quarter.

Stocks were generally higher in Europe as the rising hopes of a Federal Reserve rate cut that lifted U.S. stocks in late trading Wednesday were also cheering European investors.

Market breadth was positive. Winners beat losers by a margin of 8 to 7 on the New York Stock Exchange, while advancers narrowly topped decliners on the Nasdaq.

Comex gold rose $4.40 to 770 an ounce.