Stocks fluctuate as investors worry about economy

NEW YORK — Investors took scant comfort Wednesday from the government's plans to revive the economy and the housing market.

Wall Street showed little conviction after a steep sell-off Tuesday on worries about the global economy and banks in Eastern Europe. Several moderate rallies unraveled Wednesday as major stock market averages hovered around the lows they marked in November.

Investors reacted coolly to a $75 billion mortgage relief plan President Barack Obama introduced on Wednesday, which would provide incentives to mortgage lenders to help borrowers reduce their payments.

Plunging home values have are at the center of the 14-month-old recession, which has been one of the most severe in decades. The announcement came a day after Obama signed into law a $787 billion economic stimulus plan.

"First of all, we have to address the housing market and the more plans that are needed and the more plans that are announced — this is all part of the process," said Steven Goldman, chief market strategist, Weeden & Co., in Greenwich, Conn. He said it will take time for investors to determine whether the plans are working and that the lingering unknowns will lead to more volatility in the stock market.

In late afternoon trading, the Dow Jones industrial average rose 13.94, or 0.18 percent, to 7,566.54.

Broader stock indicators also rose. The Standard & Poor's 500 index edged up 0.53, or 0.07 percent, to 789.70, and the Nasdaq composite index rose 2.47, or 0.17 percent, to 1,473.13.

The Russell 2000 index of smaller companies fell 4.17, or 0.97 percent, to 424.73.

But even as the major indexes rose, declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange. Trading volume came to a light 1.04 billion shares.

Investors' caution Wednesday follows another round of downbeat news about the economy. The government said construction of homes and apartments tumbled by 16.8 percent in January to a record low annual rate. Applications for building permits also dropped to a record low.

The government also said production at the nation's factories, mines and utilities fell a greater-than-expected 1.8 percent last month. It marked the third straight month in which production fell.

The Fed also slashed its projections for the country's economic performance this year, predicting the economy will shrink this year. In its previous forecast, the Fed still held out the possibility of growth in 2009.