Markets end strong week mixed

A larger-than-expected drop in housing starts gave Wall Street a narrowly mixed performance Friday, but the Dow Jones industrials had their third straight record close after spending much of the session in a decline that lacked conviction. The major indexes had their best week since mid-November.

Investors remained somewhat cautious after the Commerce Department said construction of new homes and apartments sank 14.3 percent in January, the biggest drop in nearly 10 years. But there was upbeat economic news as well that lent support to the market and kept the pullback to a minimum — wholesale prices fell in January by the largest amount in three months amid retreating energy prices.

Technology stocks were weaker after Microsoft Chief Executive Steve Ballmer said late Thursday Wall Street’s revenue forecasts for the Vista operating system were “overly aggressive.” The stock, trading just off its 52-week high, fell more than 2 percent.

Friday’s advance gave the Dow its fourth straight gain; the index added 215.02 points since Tuesday. The market’s February rally has been driven by growing confidence that interest rates will hold steady as Federal Reserve Chairman Ben Bernanke battles inflation and tries to ease the economy into a soft landing.

“The Microsoft news and the housing data spooked the market,” said Jim Herrick, director of equity trading at Baird & Co. “But, this is just a mild drop, not a dramatic sell-off.”

The Dow rose 2.56, or 0.02 percent, to 12,767.57. It marked the Dow’s 30th record close since the start of October and the blue chips’ third record close of the week.

Broader stock indicators fell. The Standard & Poor’s 500 index fell 1.27, or 0.09 percent, to 1,455.54, and the Nasdaq composite index dropped 0.79, or 0.03 percent, to 2,496.31.

For the week, both the Dow and the Nasdaq rose 1.48 percent, while the S&P 500 added 1.22 percent. Stocks began their ascent Tuesday following word two companies were interested in acquiring aluminum producer Alcoa Inc. Wall Street extended its gains Wednesday after Bernanke told a Senate panel the economy should grow modestly this year and that he expects inflation will continue to ease. The testimony appeared to some investors that a reduction in interest rates might be possible this year — at the very least, it made it seem more likely the bank would keep rates stable rather than raise them to cool the economy.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.69 percent from 4.71 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.

The markets will be closed Monday for Presidents Day.

Declining issues barely outpaced advancers on the New York Stock Exchange, where volume came to 1.36 billion shares.

The Russell 2000 index of smaller companies rose 2.72, or 0.33 percent, to 818.15, a new closing high that edged past the previous mark of 816.39, set a week earlier.

Overseas, Japan’s Nikkei stock average closed lower by 0.12 percent. Britain’s FTSE 100 closed down 0.21 percent, Germany’s DAX index fell 0.02 percent, and France’s CAC-40 finished down 0.13 percent.