Home sales, fiscal forecast sink the Dow

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 earnings from U.S. manufacturers, highlighting one of the economy's bright spots, helped the market open up 85 points.

But the Dow and broader indexes turned down after weaker reports on home sales and future economic growth were released in the late morning. The Dow closed down 22.33 points, or 0.18 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 seem less afraid of spillover damage from the European debt crisis, and data on jobs and manufacturing have remained strong. The Dow is up more than 4 percent for the year.

"With global risk off center stage and attention going back to the fundamentals, this market was ready to explode, which is exactly what it is doing," said Doug Cote, chief market strategist with ING Investment Management.