NEW YORK – A surprisingly strong report on the housing market and the prospect of more cash for the International Monetary Fund to fight off a financial crisis powered stocks Wednesday to their highest close since last summer.

The Standard & Poor’s 500 index closed above 1,300 for the first time since July 28, and the Dow Jones industrial average finished at its highest since July 25. That was just before the bitter fight in Washington over the federal debt limit.

It was also the first time since Jan. 3, the first trading day of the year, that the S&P 500 moved more than 1 percent. The market has made a quiet ascent since then. The S&P is up 4 percent for the year, the Dow 3 percent.

“We think things are setting up to be better than last year,” said Brad Sorensen, director of market research at Charles Schwab. “The worst-case scenario is off the table.”

The National Association of Home Builders index, a measure of sentiment among builders, rose to its highest level since June 2007 as sales jumped. Analysts said it could be a sign the housing market has bottomed out.

The index is rising because builders are seeing a rise in people shopping for a home, not because they are seeing more sales, at least not yet. Those in a position to buy are benefiting from lower prices and mortgage rates.

Stocks of home construction companies jumped. PulteGroup Inc. rose 6 percent, Toll Brothers Inc. rose 5 percent, and KB Home rose 8 percent.

In another encouraging sign, the Federal Reserve said manufacturing rose 0.9 percent from November to December, the biggest gain since December 2010.

Christine Lagarde, managing director of the IMF, said the fund wanted to raise $500 billion more to lend to countries. The IMF has put up roughly a third of the rescue loans to debt-hobbled European countries over the past two years.

Investors are eager for signs that the world can contain Europe’s debt problem. Besides an already likely recession in Europe, a messy default by Greece or another country could lead to a financial crisis around the globe.

In other trading, Goldman Sachs stock added almost 7 percent after its quarterly profit beat Wall Street expectations. Net income still fell 58 percent in the last three months of 2011, a result of choppy financial markets.

Some bank stocks followed Goldman higher. Morgan Stanley, another investment bank, rose 6.8 percent. Bank of America rose 4.9 percent, JPMorgan Chase 4.7 percent and Citigroup 2.9 percent.

Other financial stocks sank after disappointing earnings reports. State Street Corp. plunged 6.6 percent, the largest fall in the S&P 500. PNC Financial Services Group Inc. fell 2.6 percent, and Northern Trust Corp. slipped 2 percent.

The Dow finished up 96.88, or 0.8 percent, at 12,578.95. The S&P rose 14.37, or 1.1 percent, to 1,308.04. The Nasdaq composite index, which has outperformed the other two this year, rose 41.63 points, or 1.5 percent, to 2,769.71.

Among other stocks making large moves Wednesday:

• Yahoo climbed 3 percent on news that co-founder Jerry Yang is leaving the struggling Internet pioneer. The departure clears the way for newly hired CEO Scott Thompson to take more radical action to shake up the company.

• Amphenol Corp., which makes fiber-optic cables, soared 11 percent. Its earnings that beat analysts’ expectations, and the company said strong orders should push next year’s earnings above Wall Street forecasts.

• Linear Technology Corp., which makes circuits, jumped 11 percent, most in the S&P 500. It expects quarterly revenue to rise 4 to 8 percent following strong demand in December and January. It also raised its dividend by a penny to 25 cents a share.

• Cash America International Inc., a payday lender and operator of pawnshops, sank 6 percent after cutting its earnings forecast.

NEW YORK – This month may be the slowest in the stock market in more than three years.

Trading volume, or the number of shares bought and sold, is down because there are fewer big investors buying stocks. And those who want to buy are worried about the job market and the European debt crisis — and the budget impasse in Washington. If Congress and the White House don’t agree on budget cuts and raising the government’s borrowing limit, the U.S. is at risk of defaulting on its debt after Aug. 2.

Daily volume on the New York Stock Exchange is down 22 percent so far in July compared with the same period in 2010, according to data provider FactSet. About 3.7 billion shares have traded hands every day on average, down from 4.7 billion in July last year.

If that continues, July will have the lowest average daily trading volume since December 2007, says Patrick O’Shaughnessy, a research analyst at Raymond James.

Low volume is worrisome because it suggests that few investors are driving the stock market’s gains or losses. That creates the risk for bigger price swings. When, for example, there are few buyers, someone trying to sell a stock may be forced to keep lowering the price in hopes that someone will want it — the same as a homeowner who can’t find a buyer for a house.

A lack of volume also indicates that some investors don’t believe that stocks are worth buying right now.

“Volume in many respects represents conviction,” says Jack Ablin, chief investment officer at Harris Private Bank. “And there’s just very little conviction.”

Traders have reason to be wary:

• Job growth is weak. Many investors were stunned when the government reported earlier this month that employers created just 18,000 new jobs in June. That was lower than the average of 215,000 monthly jobs created in February through April.

• The manufacturing industry is in a slump, too. The Philadelphia Federal Reserve Bank said last week that manufacturing activity in the Northeast rose only slightly in July after falling to the lowest level in two years in June. Supply disruptions from the March 11 earthquake in Japan have hurt factory production.

• Debt problems remain in the U.S. and Europe. If there’s no agreement in Washington and the government defaults on its debt, that could have a catastrophic impact on the financial markets. Some analysts say stocks could fall the way they did during the 2008 financial crisis. Meanwhile, European leaders approved a new aid package for Greece last week to reduce its debt, but it’s unclear how that will work.

All this has led investors to avoid stocks. And that has hurt volume.

In June, investors withdrew $14.5 billion more than they deposited into U.S. stock mutual funds, according to consulting firm Strategic Insight. That was the largest withdrawal from stock funds since August 2010. “Investors are running scared,” said Frank Barbera, portfolio manager of the Sierra Core Retirement Fund.

Fewer hedge funds are in existence today than in 2008, which helps to explain the lower volume, says Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. There were approximately 10,233 hedge funds in the world in the second quarter of 2008, before the financial crisis and stock market crash. By the end of June, there were 9,443, according to Chicago-based research firm HFR.

Even with the low volume, though, stocks have risen this month. The Standard & Poor’s 500 index is up 1.8 percent, while the Dow Jones industrial average is up 2.1 percent. The technology-focused Nasdaq composite index is up 3.1 percent. Stocks are up, in part, because companies like Apple Inc. and Coca-Cola Co. have reported strong profits. Second-quarter earnings are expected to rise 12.5 percent from the same period in 2010, according to FactSet.

Still, the low volume makes it difficult for investors to know when to put their money into stocks. If the S&P goes up two days in a row, but volume is low, that’s hardly an indication that a trend is emerging, Ablin said.

There’s another possible effect of low volume. As trading has been quiet, Howard Silverblatt, a senior analyst at Standard & Poor’s, said he has a noticed something near his office in Lower Manhattan: “The bars downtown are a little bit emptier.”

NEW YORK – Stocks are extending their slide after another disappointing report on the housing market.

The National Association of Realtors says sales of previously occupied homes fell 27.2 percent in July to an annual rate of 3.83 million. That’s far worse than the 4.7 million estimated by analysts polled by Thomson Reuters.

Investors are flocking to the safety of Treasurys, sending interest rates sharply lower.

The Dow Jones industrial average briefly dipped below 10,000 after the report.

The Dow is down 153, or 1.5 percent, at 10,021 in late morning trading. The Standard & Poor’s 500 index is down 18, or 1.7 percent, at 1,049, while Nasdaq composite index is down 40, or 1.9 percent, at 2,119.

NEW YORK (Reuters) – Stocks dropped on Friday after government data showed a larger-than-expected drop in July payrolls, lending more weight to concerns of a slow economic recovery.

Stocks had been rising for the past month, largely on the back of corporate earnings, and the S&P remains up nearly 9 percent from its low for the year reached on July 2.

But Friday’s declines once again pushed the S&P 500 into negative territory for the year and the benchmark index fell below its 200-day moving average, now around 1,115, a level which had previously provided support.

“Investors get optimistic that we are turning the corner, things are going to improve, then we get these numbers again,” said Terry Morris, senior equity manager for National Penn Investors Trust Co in Reading, Pennsylvania.

“We want to think that it’s improving, but we keep getting nailed.”

The U.S. economy lost 131,000 jobs in July — more than twice the decline of 65,000 that economists forecast in a Reuters poll. And the closely watched private employment number rose less than expected.

Consumer stocks ranked among the biggest losers as the monthly jobs report heightened worries about consumer spending, which accounts for about two-thirds of U.S. economic activity. Retailer Office Depot (ODP.N), which sells school and office supplies, slid 7.8 percent to $4.50, while the S&P consumer discretionary index (.GSPD) fell 1.5 percent.

The Dow Jones industrial average (.DJI) fell 134.11 points, or 1.26 percent, to 10,540.87. The Standard & Poor’s 500 Index (.SPX) lost 15.51 points, or 1.38 percent, to 1,110.30. The Nasdaq Composite Index (.IXIC) shed 28.71 points, or 1.25 percent, to 2,264.35.

The downward turn in the S&P 500′s short-term momentum is “a bit of a negative,” according to Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston, but he said he won’t be concerned if the index pulls back to 1,080 or slightly below.

But other chartists point out that a close below the 200-day moving average could mean the S&P’s daily chart generated a “double top,” which would be seen as a bearish signal.

In mid-June, the benchmark S&P 500 closed above its 200-day moving average for five straight days before a two-week slide that took it down to its 2010 low in early July.

Dow component Kraft Foods Inc (KFT.N) was among the few bright spots, rising 2.3 percent to $30.35 after the company, whose products include Kraft cheese and Maxwell House coffee, reported a higher-than-expected quarterly profit. Kraft also raised its target for cost savings from its acquisition of Cadbury, the British company known for its chocolates.

Shares of grain companies like Archer Daniels Midland Co (ADM.N) and Bunge Ltd (BG.N) edged lower after rallying more than 5 percent on Thursday. Investors took profits a day after wheat prices soared on Russia’s suspension of grain shipments because of its worst drought in a century.

Bunge dipped 0.1 percent to $54.41, while Archer Daniels Midland slipped 0.7 percent to $30.04.

(Additional reporting by Rodrigo Campos)

NEW YORK – Exchange operator NYSE Euronext said Friday that its average daily trading volumes in July rose 11 percent for European derivatives and 27 percent for U.S. equity options compared with year-ago levels.

The average daily trading volume for European derivatives rose to 4 million. Volume for U.S. equity options rose to 3.1 million.

Compared with the previous month, however, volumes fell 16 percent and 10 percent, respectively.

The year-over-year jump in European derivatives was fueled by a 25 percent jump in fixed income products. Equity products decreased 2.3 percent.

Options exchanges accounted for 25 percent of the company’s U.S. equity options in July, compared with 19 percent in July of 2009.

U.S. cash products decreased 7 percent to 2.6 billion shares, compared with a year ago.

There was one less trading day in both Europe and the U.S. for the month, compared with July of 2009.

Shares of NYSE Euronext fell 15 cents to $30.07 in afternoon trading.

Investors still trust the safety of bond funds. June was another good month for fixed income. The Investment Company Institute reported that overall, mutual funds saw net inflows, mostly into bond funds. Bond funds experienced inflows of more than $20 billion–up about $6 billion from May. Meanwhile, stock funds saw more outflows. The WSJ reports that investors haven’t consistently put money into stock funds since the market hit its low in March 2009. Low-yielding money market funds also continued to see outflows, which brings their total outflows for the year to more than $500 billion.

Wall Street Journal: Mutual Funds Gained Assets, Thanks to Bonds

[See When Choosing a Bond Fund, Keep These Factors in Mind from U.S. News.]

If you own a commodities fund that invests in futures contracts, you may want to take note of an article published Thursday by Investment News. Commodities funds are already regulated by the Securities and Exchange Commission, but there’s now a push by the National Futures Association to require them to register with the Commodity Futures Trading Commission. The article details how costly further regulation could be for mutual funds and how the SEC and CFTC have different rules that sometimes conflict with each other.

Marketwatch highlights precious metals funds’ latest struggles. As concerns about global uncertainty have tapered off, so have investments in precious metals funds, which generally see huge inflows when investors get nervous about the overall market. Precious metals mutual funds lost almost 9 percent in July, according to Marketwatch.

Investment News: Commodities funds brace for regulatory ‘confusion’

Marketwatch: Gold Bugs Get Swatted

[See What Gold Can (and Can't) Do for You from U.S. News.]

Finally, a feel-good story for the weekend. You’ve probably never heard of the Valley Forge fund, a large-value fund with about $15 million in assets under management. It’s run by 89-year-old Bernard Klawans, who has never had any formal training in finance or money management. He says he’s simply a retired aerospace engineer who enjoys managing money. The fund has beaten most of the competition over the past 10 years and is now U.S. News‘s top-ranked large-value fund.

[See How A One-Man Fund Beat All the Rest from U.S. News.]

NEW YORK (Reuters) – U.S. stocks closed little changed on Friday, but Wall Street wrapped up its best month in a year after the earnings season rounded the final turn with a group of strong results that offset the impact of poor economic data.

While the major indexes each posted 7 percent gains for the month, it came during low volume and followed a combined decline of nearly 14 percent for May and June.

The conflict between strong earnings and lackluster economic news has held stocks in a tight range throughout July. Prior to Friday’s open, second-quarter GDP data disappointed investors, even though shares came back later in the session.

A lack of clear direction has led to more technical trading, with the S&P 500 finding support around 1,100 while struggling to move above its 200-day moving average around 1,115. A sustained move above that level would be bullish for investors.

“We have failed up here essentially about three times, so technically people are using that as something to lean on the short side,” said Nick Kalivas, vice president of financial research and senior equity index analyst at MF Global.

Kalivas said global purchasing managers’ indexes at the start of next week will give investors a better idea about the direction of the economy and could be a catalyst for markets.

“The market kind of stalled up the last couple of days. On the surface earnings numbers have been pretty strong, but underneath there was a loss of momentum,” he said.

Speculators are net short the S&P 500, according to Commodity Futures Trading Commission data but trimmed their short portions from a week earlier.

For July the Dow rose 7.1 percent, the S&P 500 gained 6.9 percent and the Nasdaq added 6.9 percent.

The Dow Jones industrial average (.DJI) dropped 1.22 points, or 0.01 percent, to 10,465.94. The Standard & Poor’s 500 Index (.SPX) gained 0.05 points, or 0.00 percent, to 1,101.58. The Nasdaq Composite Index (.IXIC) gained 3.01 points, or 0.13 percent, to 2,254.70.

For the week, the Dow rose 0.4 percent, the S&P 500 lost 0.1 percent and the Nasdaq dipped 0.7 percent.

In corporate news, Chevron Corp (CVX.N), the second-largest U.S. oil company, reported a three-fold jump in quarterly profit, topping Wall Street’s forecast, but its revenue was below analysts’ estimate. The shares rose 0.2 percent at $76.21.

U.S. drugmaker Merck & Co (MRK.N) reported a profit that beat analysts’ estimates, but its sales were less than Wall Street’s expectations, and the stock fell 1.7 percent to $34.46.

In the Commerce Department’s first estimate of economic growth for the second quarter, U.S. GDP expanded at a 2.4 percent annual rate, driven by capital investment, but the expansion was down from the first quarter’s revised 3.7 percent rise.

U.S. consumer sentiment plunged in July to its lowest level since November on bleak prospects for jobs and income a year since the economic recovery began, according to the Thomson Reuters/University of Michigan’s Surveys of Consumers.

The Institute for Supply Management-Chicago business barometer, however, showed businesses boosted employment and orders.

About 7.63 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, short of last year’s estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about five stocks rose for every four that fell.

(Reporting by Edward Krudy; Editing by Kenneth Barry)

NEW YORK – Stocks had a fitting end to a choppy July as prices seesawed their way to a narrowly mixed finish. The market still had its best month in a year.

Investors had an ambivalent response Friday to the government’s gross domestic product report, which showed that economic growth slowed in the April-June quarter. The Dow Jones industrial average fell almost 120 points in early trading, then ratcheted up and down until the close. The Dow ended down just a point, and the other big indexes had similarly small moves.

The day was much like the rest of July, which saw investors alternately buying on strong earnings reports and selling on weak economic numbers. The Dow rose 7.1 percent for the month. The Dow and the Standard & Poor’s 500 index both had their best months since July 2009 and their first winning months since this past April.

A repeat performance in August seemed unlikely due to the market’s current pessimism, especially since the bulk of second-quarter earnings reports are in. Many investors, uncertain about the where the market is heading, stayed on the sidelines for much of July or moved money into safer investments. Even on days when the Dow was up 100 or 300 points, trading volume was unusually low.

“It’s a very cautious environment today,” said Rob Lutts, president, CIO at Cabot Money Management. That caution, he said, is what leads investors to sell.

The Commerce Department’s GDP report was troubling for the market, and followed recent reports on housing and unemployment that showed the recovery has slowed. GDP grew at an annual pace of 2.4 percent in the second quarter, less than the 2.5 percent forecast of economists polled by Thomson Reuters.

Analysts said that as investors read deeper into the report, it didn’t look as bad as they initially thought. They found some good news in the consumer savings rate.

Business spending on equipment and software also jumped in the second quarter by the biggest amount in 13 years. That was encouraging because it means companies could be getting ready to start hiring.

“We had a little bit for the bulls and a little bit for the bears,” Lutts said, “and ultimately no one is really happy.”

The Dow fell 1.22, or 0.01 percent, to 10,465.94. Its July gain was its best monthly advance since it rose 7.8 percent in July 2009.

The Dow’s top five performers for the month all had strong earnings: DuPont Co., which rose 17.58 percent during July; Caterpillar Inc., up 16.11 percent; American Express Co., up 12.44 percent; Chevron Corp., up 12.30 percent and Microsoft Corp., up 12.17 percent.

The Standard & Poor’s 500 index rose 0.07, or 0.01 percent, to 1,101.60. It rose 6.9 percent for July, its best performance since it rose 7.4 percent in July 2009.

The Nasdaq composite index rose 3.01, or 0.1 percent, to 2,254.70.

Rising stocks outpaced losers by about 3 to 2 on the New York Stock Exchange. Consolidated volume, including shares traded on other exchanges, came to a very light 4.2 billion shares, down from Thursday’s 4.7 billion.

Volume usually falls off in the summertime but stays strong during July. This July was particularly slow.

“The biggest crowds aren’t on the trading floor, they are on the beach. People don’t want to be involved in the market now,” said Jeffrey Frankel, president of Stuart Frankel & Co. “One day they are up, one day they are down. Nothing is making any sense. That’s why there is no volume.”

Treasurys benefited from the uncertainty. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.91 percent from 2.99 percent. Its yield is often used as a benchmark for interest rates on mortgages and other consumer loans. A yield below 3 percent suggests investors are worried about long-term growth and don’t fear inflation will be a problem anytime soon. Inflation is a threat to the long-term value of bonds.

Investors did get some mildly good news from two other economic reports. The University of Michigan/Reuters consumer sentiment index for July rose slightly more than expected to 67.8 from a preliminary reading of 66.5. Economists expected it to rise to 67.

The Chicago Purchasing Managers Index, which measures manufacturing activity in the Midwest, rose unexpectedly to 62.3 this month from 59.1 in June. Economists were expecting a drop to 56.5. The report is seen as an indicator of how the Institute for Supply Management’s nationwide manufacturing index is likely to come in when it’s released on Monday.

Traders were also being cautious because they’re waiting for a series of key reports next week that will give a first look at how the economy is doing in the current quarter. The ISM will have two reports and the Labor Department issues its report on employment for this month.

Economists predict the ISM will say manufacturing and the services industry expanded in July but at a slower pace than in June. Meanwhile, the unemployment rate likely inched higher to 9.6 percent in July from 9.5 percent in June as the government laid off more temporary census workers. Private employers likely added 90,000 jobs during the month, slightly better than in June.

Overseas markets mostly fell Friday after reports that Spain’s credit rating is likely to be cut by Moody’s Investors Service. The potential downgrade comes as the country’s unemployment rate jumped to a 13-year high of 20.09 percent and the government continues to grapple with rising debt problems.

Spain’s IBEX 35 fell 1.2 percent. Britain’s FTSE 100 fell 1.1 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 fell 0.2 percent. Japan’s Nikkei stock average fell 1.6 percent.

WHAT A MONTH: The Dow Jones industrial average and Standard & Poor’s had their best month since July 2009 and their first winning month since this past April. Strong earnings were behind the big gains.

BUT THE FUTURE’S UNCERTAIN: Trading at the end of July, including Friday’s narrowly mixed finish, showed that investors are cautious because of economic numbers that point to a slowing recovery.

THE NUMBERS: The Dow rose 7.1 percent for July, while the S&P 500 gained 6.9 percent.