Originally created 11/29/06

Stocks advance amid mixed economic news



NEW YORK - Stocks advanced modestly Tuesday after Wall Street shrugged off a sharp drop in orders for manufactured goods and took comfort in the first gain in existing home sales in eight months.

The rise in stocks came after investors showed little reaction to comments from Federal Reserve Chairman Ben Bernanke that he remains concerned that inflation or a steeper-than-expected decline in the housing market could harm an already slowing economy.

In the speech, which included Mr. Bernanke's most extensive comments on the economy since this summer, he said inflation remains higher than he would like but that it should fall as the economy cools.

The Commerce Department's report that orders for durable goods fell 8.3 percent in October - the largest drop in more than six years - stoked concerns that the economy is slowing at too fast a pace. But a report from the National Association of Realtors showing a slight uptick in home sales lent support to the market although it also revealed the median selling price fell by the steepest level on record last month.

The market's muted response followed its worst session in more than four months Monday.

John Zielinski, a portfolio manager at Neuberger Berman, contends the market's drop was overblown and that investors could be seeing lower-than-usual liquidity given that for many brokerages, Thursday marks the end of their fiscal year and they are therefore trying to lock in gains.

The Dow Jones industrial average was up 14.74, or 0.12 percent, at 12,136.45, after falling 158 Monday.