Stocks fluctuate after consumer report

NEW YORK (AP) - Wall Street struggled to find a direction Wednesday, as investors, already nervous about the fate of the nation's top automakers, scoured more economic data in search of some relief.

Investors vacillated as they tried to hold on to the gains achieved in the previous session. Still, reports on consumer prices and new-home construction provided more evidence that the economy remains in flux.

According to the Labor Department's Consumer Price Index, consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount. While lower prices might be good for the consumer, they can hurt corporate profits. Lower prices also raise the threat of deflation, a prolonged bout of falling prices that hasn't been seen in the U.S. since the Great Depression.

Meanwhile, a government report on the housing sector showed that the industry's severe correction continues. The Commerce Department reported that construction of new homes plunged 4.5 percent last month to the lowest level on government records.

The market is also bracing for more testimony in Congress from the heads of General Motors Corp., Ford Motor Co., and Chrysler LLC. They are asking lawmakers for a massive infusion of cash to prevent millions of layoffs, stave off bankruptcy and stabilize the companies.

Investors are concerned at the repercussions should any of the three automakers collapse, an event that could ripple through an already battered economy. Congressional Democrats have proposed using part of the $700 billion financial bailout package to pump into the ailing auto industry, but Republicans oppose such an approach.

In midmorning trading, the Dow Jones industrial average rose 4.46, or 0.05 percent, to 8,429.21. Standard & Poor's 500 index fell 2.20, or 0.26 percent, to 856.92, while the Nasdaq composite index fell 0.40, or 0.03 percent, to 1,482.87.

The Russell 2000 index of smaller companies fell 3.08, or 0.69 percent, to 444.43.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to a light 186.63 million shares.

Wall Street rebounded Tuesday in another turbulent session, as investors rushed back into the market after testing a 2003 low. The Dow finished up 151 points, with most of the gains coming in the final hour of trading.

Stocks have been trading erratically for several weeks as investors try to gauge the direction of the economy, and analysts expect the volatility to continue for some time while the market recovers from the steep losses logged in October. However, investors are continually faced with a barrage of bleak economic news, which has stymied any meaningful gains in the market.

Many economists believe the economy has fallen into a recession that could be the worst downturn in more than two decades. The expectation is that easing inflation pressures will give the Federal Reserve room to cut interest rates further to combat the downturn. But investors seemed to have found little consolation in the potential for an additional rate cut.

Volatility in the stock market has kept demand for Treasury bonds high. The yield on the benchmark 10-year Treasury note fell to 3.47 percent from 3.53 percent on Tuesday.

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

Investors are also awaiting a report expected to show U.S. oil inventories gained last week as fuel demand declined, pushing oil to its lowest in almost two years. Light, sweet crude added 80 cents to $55.19 a barrel on the New York Mercantile Exchange.

In Asian trading, Japan's Nikkei index fell 0.66 percent, and Hong Kong's Hang Seng Index fell 0.77 percent. In midday trading in Europe, Britain's FTSE 100 fell 2.55 percent, Germany's DAX index fell 3.03 percent, and France's CAC-40 fell 2.01 percent.