U.S. AVERAGES

Market reacted with a little conviction during the session but at close the averages crawled back to the flat line. The return of 30-year bond, weak earnings from Time Warner, brief fall in oil below $62 and rise in gold above $440 did not help buyers to return to market.

Home builders, consumer discretionary, casino an energy stocks were trading lower during the day while select tech stocks, mining and materials stocks traded up.

There were 15 new highs every low on NYSE and 10 new highs for every low on NASD. Decliners out paced by gainers 17 by 15 on NYSE and by 12 to 18.

Market will be looking for unemployment claims report tomorrow and Fed’s decision on interest rate next week. On Thursday market will be looking for earnings from Sara Lee, Alltel, Pixar, Gillete, Univision and Computer Sciences Corp.

ECONOMIC NEWS

The Department of Energy's Energy Information Administration said that crude oil inventories rose by 200,000 barrels for the week ended July 29, advancing to 318.0 million barrels vs. the 317.8 million barrels the previous week.

Gasoline inventories posted a week-over-week drop of 4 million barrels. Stocks of distillate fuel oil rose by 1.5 million barrels.

According to the report from the Institute for Supply Management business activity in the service sector saw continued growth in the month of July, although the pace of growth slowed more than economists had estimated. The report also marked a sharp increase in prices that may result in to some inflation worries.

The ISM’s index of business activity in the service sector fell to 60.5 in July from 62.2 in June. Economists had expected a decline to 61.5.

The drop in the pace of business activity growth comes in spite of continued improvement in new orders, with the new orders index advancing to 61.9 in July vs. 59.5 in June. The backlog of orders index also grew to 53.5 in July versus 52.5 in June.

The pace of employment growth in the service sector slowed, with the employment index falling to 56.2 in July from 57.4 in June.

Prices saw a sharp rise in July, with the prices index climbing to 70.3 vs. 59.8 in June.

Mortgage application volume declined in the most recent week, according to industry report released Wednesday, with a rise in purchase activity not quite overcoming a fall in refinancing.

The Mortgage Bankers Association reported that its market composite index of mortgage loan application volume declined 0.3% for the week ended July 29. The 4-week moving average for the market index, which flattens out week-to-week volatility, slid 3.2% The index of purchase activity advanced by 1.9%, while the index of refinancing activity declined by 3%. The refinance share of total applications dropped to 41.7% versus 42.9% in the previous week.

INTERNATIONAL MARKET NEWS

European stocks ended mixed after several days of gains on mixed earnings news from several important companies, but upbeat news, provided by activity in mergers and acquisitions with Adidas-Solomon and Atlanta in the focus. Averages in Germany dropped 0.2%, in France lost 0.2%, and in the U.K. fell 0.01%.

Asian-Pacific markets closed mixed after higher early trading, following Wall Street gains. The Nikkei advanced 0.4% led by auto makers, mining and steel stocks. As crude-oil prices rose above $62 a barrel, Nippon Oil jumped 4.4% to become the biggest gainer in the index. The other regional markets ended mostly down. Hong Kong’ Hang Seng lost 0.1%, South Korea’s Kospi fell 0.2%, and Singapore’s Straits Times dropped 0.5%. The dollar traded at the lower end of 111-yen range in early Tokyo trading.

European markets traded lower at mid-day after several consecutive gaining sessions, reflecting mixed earnings reports from major companies, although deal news provided some upside. The German DAX 30 lost 0.3%, the French CAC 40 declined 0.4%, and London’s FTSE 100 dropped 0.3%