Stocks open flat after housing starts report

Stocks slipped early Friday as investors' nervousness over a fresh record for oil prices dented some enthusiasm over a surprising jump in new home construction.Wall Street, hoping for an economic rebound in the second half of 2008, has been searching for signs that the housing market, while weak, is perhaps bottoming out. The market got some reassurance when the government said construction of new homes rose 8.2 percent in April. The jump — the largest monthly advance in more than two years — was largely due to an increase in apartment construction, and compared to forecasts of a 0.7 percent decline.

However, energy worries continued to plague investors.

Light, sweet crude oil surged more than $3.50 to $127.82 a barrel — a new trading high — in premarket electronic trading on the New York Mercantile Exchange, before pulling back slightly to $127.55 a barrel.

Investors have been tracking energy prices closely, with the average U.S. retail price of gasoline around $3.77 per gallon and the average price of diesel fuel near $4.46 a gallon. Consumers and businesses alike are struggling with high commodities costs, despite mild overall readings on inflation, so Wall Street remains concerned about spending on discretionary items.

In the first hour of trading, the Dow Jones industrial average fell 18.32, or 0.14 percent, to 12,974.34.

Broader stock indicators also declined. The Standard & Poor’s 500 index fell 1.69, or 0.12 percent, to 1,421.88, and the Nasdaq composite index dropped 8.48, or 0.33 percent, to 2,525.25.