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Stocks End Flat on Unease About Consumer

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TIM PARADIS | December 26, 2007 05:49 PM EST | AP

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NEW YORK — Stocks finished largely flat Wednesday as investors returned from the Christmas holiday to news of weaker-than-expected retail sales. A jump in oil prices also concerned Wall Street.

The International Council of Shopping Centers said its index of retail chain store sales rose 2.8 percent last week, rounding out a sluggish December performance that puts merchants on track for a smaller sales gain than the trade group originally expected. Still, there is some hope sales will rebound as shoppers start spending with holiday gift cards.

Other reports released alongside Christmas proved disappointing. Target Corp. indicated its sales may have fallen in December, while MasterCard Inc. said holiday spending _ including credit, cash and checks _ climbed a modest 3.6 percent between Thanksgiving and Christmas, weighed by a slowdown in sales of women's apparel. That compares with a rise of 6.6 percent over the same period last year. The 2007 holiday figure is at the low end of its 3.5 percent to 4.5 percent range. Excluding gasoline and auto sales, that figure was 2.4 percent.

The news could raise concerns about the strength of consumer spending and, in turn, the economy. However, it has been widely expected that holiday sales would be slow.

A report that U.S. home prices fell for the 10th consecutive month in October also appeared to limit stocks' gains.

Kim Caughey, senior equity analyst at Fort Pitt Capital Group in Pittsburgh, said reports on retail had upended some investors' hopes for strong consumer spending in the long weekend before Christmas.

"From the quick analysis it doesn't look like it was a great year. I think investors had held out hope that retail might have had that final flourish. It was a sad flourish, not a strong one," she said.

The Dow Jones industrial average rose 2.36, or 0.02 percent, to 13,551.69.

Advancing and declining issues were just about even on the New York Stock Exchange and consolidated volume came to a light 1.94 billion shares.

Broader stock indicators also showed gains. The Standard & Poor's 500 index rose 1.21, or 0.08 percent, to 1,497.66, and the Nasdaq composite index rose 10.91, or 0.40 percent, to 2,724.41.

Major stock indicators had advanced in the previous three sessions.

Bond prices fell. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.29 percent from 4.21 percent late Monday.

The dollar was mixed against other major currencies, while gold prices rose.

A barrel of light, sweet crude rose $1.84 to settle at $95.97 on the New York Mercantile Exchange. Oil rose to a one-month high of $96.54 during the session.

Caughey said rising oil prices likely pressured stocks but noted that the light trading volume seen in both Monday's and Wednesday's sessions meant investors shouldn't focus too much on the market's moves.

"I don't know if the direction means anything but the magnitude does," she said. "A little bit of sentiment goes a long way on light trading days."

But for those investors examining the markets, the holidays loomed large as Wall Street looked for signals about the consumer but also insights about the broader economy.

The Standard & Poor's/Case-Shiller home price index posted a decline of 6.7 percent, marking the steepest monthly decline since early 1991.

Among chain stores, Target fell $1.31, or 2.5 percent, to $51.16 after the nation's No. 2 retailer said same-store sales _ those from stores open at least a year _ would range from a 1 percent increase to a 1 percent decrease for December. Earlier expectations had called for a gain of 3 percent to 5 percent.

Apple Inc. traded above $200 for the first time Wednesday as investors appeared upbeat about the company's ability to see continued brisk sales of its iPods and computers. The stock finished up 15 cents at $198.95 after trading as high as $200.96.

Acquisition news perhaps helped ease some of investors' concerns. Warren Buffett's Berkshire Hathaway Inc. on Tuesday agreed to pay $4.5 billion to buy 60 percent of Marmon Holdings Inc., a privately held company with more than 125 manufacturing and service businesses.

The Russell 2000 index of smaller companies rose 2.64, or 0.33 percent, to 797.03.

Overseas, Japan's Nikkei stock average closed up 0.65 percent. European stock markets were closed for an extended holiday.

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