Data from National Association Realtors indicated sales of existing homes rose 2.8 percent in June to a seasonally adjusted annual rate of 5.23 million units from 5.09 million units in May. Home sales are down 6.4 percent from 5.59 million last June, a sign that consumer demand is edging lower from last year.
Existing home sales is just one piece of data the Federal Reserve uses to gauge the level of inflation in the economy. The more consumers scoop up things like homes, cars and other major items, the higher the chance of inflation pressure.
"Existing home sales is a lagging indicator, reflecting contracts that were signed several months ago," wrote Karen Dexter, an economist at Merrill Lynch, in a report.
"Both the new home sales and construction data, which are more timely, have been trending lower in recent months. We expect existing home sales will stabilize at a lower rate in (the) coming months."
The Conference Board also said that the consumer confidence index, a survey of consumer sentiment, rose in July to 141.7 from 139.2 in June, an indicator that the American consumer shows little sign of modifying spending patterns.
The level of consumer spending in the economy is crucial to the Fed. "The key to a soft landing, which (Fed chairman) Alan Greenspan was optimistic about in recent speeches, is how the Fed can calm down consumer spending," said David Jones, chief economist at Aubrey Lanston, "so he's watching consumer spending in every way."
While Jones added that there is no strong historical correlation between consumer confidence and spending, "at a moment like this, confidence carries more weight because Greenspan is looking at everything he can" to manage the economy.
The Nasdaq composite index rose 23.05 to 4,004.62, and the Standard & Poor's 500 index climbed 6.14 to 1,470.43. The Dow Jones industrial average rose 24.75 to 10,709.87.
The CNET tech index squeaked up 11.91 to 2,881.24. Advancers and decliners were balanced, with 49 of the 97 stocks in the index rising, 45 falling and three remaining unchanged.
Of the 18 sectors tracked, server hardware makers made the most gains, rising 2 percent. Internet e-tailers were the day's largest losers, sliding 2 percent. E-tailer Amazon.com fell $4.06, or 10 percent, to $34.69.
Akamai Technologies fell $17.56, or 16 percent, to $90.31 after the company reported that second-quarter losses increased from the previous quarter.
The company, which provides services that help Web sites move data around the Internet, said quarter losses widened to $243.2 million, or $2.78 a share, from $35.4 million, or 47 cents, in the first quarter.
Shares of AT&T rose after the company reported second-quarter operating profits rose 18 percent to reach $1.7 billion or 52 cents a share, up from $1.44 billion, or 45 cents a share, a year earlier. Ma Bell rose $1.56 to $34.88.
The 7.5 million share initial offering of Blue Martini Software was the largest percentage gainer on the Nasdaq. The stock rose $24.78, of nearly 124 percent, to $44.78 on a volume of 6.1 million shares.
The Philadelphia semiconductor index rose 18.24, or 2 percent, to 1,100.01, led by test equipment maker, KLA-Tencor, which rose $2.81, or 5 percent, to $55.19.