S&P rises while Dow, Nasdaq fall

NEW YORK » Wall Street closed narrowly mixed yesterday as investors wrestled with record-high commodities prices and data that pointed to a continually weakening economy.

The Institute for Supply Management's index of U.S. manufacturing activity came in yesterday at 48.3 -- indicating a milder contraction than the 48.1 the market expected, but still, its lowest level in nearly five years.

Furthermore, the Commerce Department reported that construction spending in January fell by 1.7 percent, the steepest amount in 14 years.

"The two economic numbers that came out today were still rather on the negative side and they point to further weakness in economic activity," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

But rising commodities prices -- although they threaten to eat into consumers' discretionary spending -- encouraged Wall Street to pour money into energy, metals and mining companies. Crude oil surged to a record near $104 a barrel before settling up 61 cents at $102.45, while gold soared to a record near $1,000 an ounce. Silver, corn and soybean prices also hit all-time highs.

The Dow Jones industrial average -- after slumping more than 100 points briefly during afternoon trading -- finished down 7.49, or 0.06 percent, to 12,258.90.

Broader stock indicators were mixed. The Standard & Poor's 500 index rose 0.71, or 0.05 percent, to 1,331.34, while the Nasdaq composite index fell 12.88, or 0.57 percent, to 2,258.60. The Russell 2000 index of smaller companies sank 1.96, or 0.29 percent, to 684.22.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange. Consolidated volume came to 3.99 billion shares, down from 4.23 billion Friday.

Bond prices pulled back yesterday after jumping amid Friday's stock market losses. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55 percent from 3.53 percent late Friday.

Billionaire Warren Buffett said in a CNBC interview yesterday the U.S. economy is essentially in a recession.

The two weakest stocks yesterday among the 30 Dow companies were Boeing Co. and Citigroup Inc.

Boeing fell after losing a $40 billion Air Force tanker contract. Boeing had been supplying refueling tankers to the Air Force for nearly 50 years. European Aeronautic Defence and Space Co., which makes Airbus planes, and Northrop Grumman, were named Friday as winners of one of the biggest Pentagon contracts in decades.

Boeing fell $2.12, or 2.56 percent, to $80.67, and Northrop Grumman jumped $3.96, or 5 percent, to $82.57.

Citigroup fell 62 cents, or 2.61 percent, to $23.09, alongside other financial stocks due to the growing fear that problems with credit will get much worse before they improve.

Jumbo mortgage lender Thornburg Mortgage Inc. said yesterday it could go out of business because more financial backers are demanding additional collateral or repayment on the loans they made. The mortgage lender's shares fell $4.58, or 51 percent, to $4.32.