A brief morning rally Thursday pushed the Dow Jones industrial average above its highest close since the financial crisis of 2008, but stocks finished lower for the day after mixed economic data tempered traders' optimism.
Solid news on factory orders and strong earnings from U.S. manufacturers, highlighting one of the economy's bright spots, helped the market open higher. The Dow rose 85 points.
But the Dow and broader indexes turned negative after weaker reports on home sales and future economic growth were released in the late morning. The Dow closed down 22.33 points, or 0.2 percent, at 12,734.63.
The Dow and other indexes are still up sharply for the year, and for about 45 minutes Thursday morning, the Dow traded above 12,810.54, its peak from last year and the highest close since the spring before the 2008 financial crisis.
Traders appear less afraid of spillover damage from the European debt crisis, and data on jobs and manufacturing have been consistently strong. The Dow is up more than 4 percent for the year.
The government reported early Thursday orders to factories for long-lasting manufactured goods increased in December for the second straight month, and a key measure of business investment rose solidly.
That strong demand was apparent in quarterly earnings reports from U.S. manufacturers. 3M stock closed 1.3 percent higher after its fourth-quarter profit beat Wall Street's estimates.
Later in the day, the government reported an unexpected drop in new home sales in December, capping the worst year for home sales since record-keeping began in 1963. A private gauge of future economic activity also grew more slowly than expected.
The Dow's post-crisis high during the trading day was 12,928.45, reached May 2, 2011. It traded as high as 12,841.95 on Thursday. The average would need to rise about 11 percent to get to its record high close of 14,164.53, reached on Oct. 9, 2007.
The Standard & Poor's 500 closed down 7.63 points, or 0.6 percent, at 1,318.43. It was dragged lower by volatile financial companies and telecommunications firms including AT&T. Its post-crisis peak was 1,370.58, also set May 2, 2011.
The Nasdaq shed 13.03 points, or 0.5 percent, to close at 2,805.28.
Stocks had their highest close in eight months Wednesday after the Federal Reserve said it plans to keep interest rates extremely low until late 2014 to encourage lending and investment and support the economic recovery.