Stocks Fight Their Way Back to Mixed Close

Because consumer confidence is highly correlated with gasoline prices, the decline in gasoline prices in recent weeks has contributed to the bolstered consumer, wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics, in an email. He said the August bump in confidence pales in comparison with the substantial decline of the last year, however.

The June Standard & Poor's/Case-Shiller home-price index fell 15.4% from a year ago. The index declined 0.5% from May to June.

Meanwhile, the Census Bureau said that new-home sales in July rose to an annual rate of 515,000 units, an increase of 2.4% over June's revised figure of 503,000. The initial June reading had homes selling at an annual pace of 530,000 units. "We still can't say with any confidence that sales have hit bottom, though the rate of decline has certainly slowed," wrote Shepherdson. He said that a decline in inventories is an encouraging sign.

Chris Johnson, chief executive officer of Johnson Research Group, said that analysts were expecting a similar decline in home sales. He said that in the short term, the result doesn't pose much selling pressure for the market, but as lenders continue to reduce credit lines to consumers and face exposure to assets that are devaluing, risks to financial institutions increase. Meanwhile, homeowners will feel a pinch on the consumer side as their lines of credit dwindle, he said.

The Fed also released the minutes from its Aug. 5 policy meeting. At that gathering, the central bank elected to keep its target interest rate at 2%, which is where it's been since April. The minutes indicated that the Fed was concerned over the slowing global economy and saw continued downside risks to growth. According to the minutes, the Fed is looking to raise interest rates the next time it makes a change.