Stocks ease after advance

Wall Street edges back a bit after a two-day advance amid rising oil prices and another weak reading on the housing market.

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NEW YORK ( -- Stocks inched lower Thursday morning, as higher oil prices and weak home sales gave investors a reason to retreat after a two-day rally that lifted the Dow industrials by nearly 550 points.

The Dow Jones industrial average (Charts) gave up 0.2 percent around 90 minutes into the session, after having risen 546.01 points in the previous two sessions, the best two-day run on a point basis since October 2002.

The broader S&P 500 index (Charts) fell 0.3 percent and the tech-fueled Nasdaq (Charts) lost a few points.

Stocks surged Wednesday after comments from Donald Kohn, the Federal Reserve's No. 2 official, suggested that the central bank will cut rates again at its next policy meeting. Fed Chairman Ben Bernanke speaks Thursday night and investors will be looking to see that his speech adds to such bets.

Plunging oil prices helped the advance Wednesday. But on Thursday, oil prices rebounded, following a Minnesota pipeline explosion. U.S. light crude for January delivery jumped $2.38 to $93 a barrel on the New York Mercantile Exchange. (Full story).

In other news, October new home sales were much weaker than expected and the price of new homes plunged from a month ago, according to a government report. Sales rose from a revised reading on the previous month, but the results were still short of expectations. (Full story)

Another report showed that the economy grew at the best pace in four years in the third quarter, according to a government report released Thursday morning. (Full story).

A separate report showed a surprisingly large rise in weekly jobless claims last week.

In corporate news, E*Trade Financial (Charts) said it received a $2.5 billion cash infusion from Citadel Investment Group. The online brokerage also said its CEO was stepping down. Shares gained 2 percent and topped the Nasdaq's most-actives list, giving up bigger gains from the open.

But other big financial stocks slumped, retreating after leading the two-day advance. Merrill Lynch (Charts, Fortune 500), Morgan Stanley (Charts, Fortune 500), Lehman Brothers (Charts, Fortune 500) and JP Morgan (Charts, Fortune 500) were among the decliners.

Sears Holdings (Charts, Fortune 500) reported sharply lower-than-expected earnings in the third quarter, citing weaker sales and clearance markdowns. Shares plunged 13 percent in active Nasdaq trade.

The rising oil prices dragged on fuel-dependant companies such as airlines, truckers and railroads. That sent the Dow Jones Transportation (Charts) average down by 1.4 percent.

However, oil services stocks gained, including Exxon Mobil (Charts, Fortune 500), Valero Energy (Charts, Fortune 500) and Sunoco (Charts, Fortune 500).

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to one on volume of 380 million shares. On the Nasdaq, decliners topped advancers five to four on volume of 700 million shares.

Treasury prices rallied, after sliding for the last two sessions. The rally sent the yield on the 10-year note to 3.92 percent from 4.03 percent late Wednesday.

In currency trading, the dollar gained versus the euro and slipped versus the yen.

COMEX gold for February delivery tumbled $3 to $804.30 an ounce, falling along with other dollar-traded commodities. To top of page

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