Disappointing housing data sends stocks lower

Stocks closed narrowly mixed Tuesday in the wake of a surprise drop in housing construction and a cautious outlook from retailer Home Depot that led energy and utility stocks to pare gains.

The government reported that construction of homes and apartments fell 12.8% last month to the lowest pace in the half-century for which records go back.

Analysts had expected housing starts to rise.

Although the report was seen as a setback, it did not set off heavy selling.

The Dow Jones industrial average fell 29.23 points, or 0.3%, to 8,474.85, while the Standard & Poor’s 500 index fell 1.58 points, or 0.2%, to 908.13.

The Nasdaq composite index, however, rose 2.18 points, or 0.1%, to 1,734.54.

The Russell 2,000 index of smaller companies fell 0.3%.

About three stocks rose for every two that fell on the New York Stock Exchange. Volume was light.

“It’s hard enough to get going after you’ve been up 30% in the S&P; 500 in 10 weeks,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors. “When you have news that’s as deflating as this, it gets nearly impossible.”

Home Depot was the biggest loser in the Dow, falling 5.3%. Profit grew at the country’s largest home improvement retailer, but the company didn’t raise its forecast for the year as rival Lowe’s did Monday.

The report from Lowe’s helped lift the S&P; 500 index Monday back into the black for the year. It’s still up marginally for 2009 after Tuesday’s fall.

In other market highlights:

* Stocks of credit card companies fell after the Senate voted to restrict their ability to raise interest rates and impose other fees. American Express fell 5.1%, while Capital One Financial lost 4.5%.

* MGM Mirage sank 4.6% after the Las Vegas company announced it sold $1 billion in stock to the public and $1.5 billion in debt to private investors. Beverly Hills-based Tracinda, billionaire investor Kirk Kerkorian’s investment firm, bought $100 million of the shares sold to the public, but its stake in MGM Mirage fell to 38.9% from 53.8% before the offering.