Erratic Wall Street closes lower

Wall Street closed slightly lower in erratic trading today as investors, uneasy about the credit markets and record-high oil prices, took little solace from reports on new home sales and durable goods orders.

The Commerce Department said sales of new homes rose 4.8% in September from August’s levels. The market initially popped on the data, as economists had predicted a decline. But it eventually pulled back because the sales increase was due to a big downward revision in August’s decline, and that homebuilders had offered discounts in September to move stock.

“The sad part is, even with the discounts, we still have inventory overhang. And that’s a problem,” said Michael Strauss, chief economist at Commonfund. He noted that home prices were still falling, as were sales of existing homes, which make up the majority of the housing market.

Another report showed that orders of big-ticket items, one gauge of business spending, fell 1.7% in September, following August’s 5.3% drop. The economic data drew close attention by Wall Street as investors looked for clues to determine if the Federal Reserve would lower rates at its meeting next week.

Meanwhile, investors also had to contend with higher energy prices – crude oil spiked to an all-time high of 90.60 a barrel before settling slightly lower - and credit worries continued to dog the market. Speculation that insurer American International Group might suffer credit costs weighed on the Dow Jones industrial average, which later rebounded from its lows.

The Dow fell 3.33, or 0.02%, to 13,671.92 after changing direction several times. The blue chip index was briefly down more than 100 points.

Broader stock indicators also fell. The Standard & Poor’s 500 index fell 1.48, or 0.10%, to 1,514.40, while the Nasdaq composite index fell 23.90, or 0.86%, to 2,750.86.