FRIDAY, JANUARY 27, 2012.... Stocks opened higher today and pushed to levels last seen in the spring of 2008 before falling back on economic worries. The initial surge was set off by a combination of strong earnings from Caterpillar (CAT +2.07%) and Netflix (NFLX +22.06%) and the after-glow of the Federal Reserve's projection that it may not have to raise interest rates until late 2014. The Dow Jones industrials ($INDU -0.18%) briefly touched levels last seen in May 2008. Crude oil (-CL) moved above $100 a barrel, and gold (-GC) pushed well above 1,700 an ounce. But reports of weaker-than-expected​ new-home sales in December (and the worst year on record) and a bump higher of initial jobless claims gave skeptics an opening to sell the market lower. And sell they did. Apple (AAPL -0.45%) and Starbucks' (SBUX +1.19%) were two of a number of stocks that hit new all-time highs but sold off. Apple sold off during the regular session. Starbucks was lower after releasing fiscal-first-quarter​ earnings.

The Dow closed down 22 points to 12,735. The blue chips had been up as many as 85 points to 12,842 by 9:55 a.m. The Standard & Poor's 500 Index ($INX -0.57%) was down 8 points to 1,318 after reaching as high as 1,333. The Nasdaq Composite Index ($COMPX -0.46%) was off 13 points to 2,805. The Nasdaq-100 Index ($NDX -0.45%), which tracks the largest Nasdaq stocks, was off 11 points to 2,455. The market's January rally pushed the major indexes levels not seen since mid-2008. The reason for the gains -- at least until today -- were signals the economy was strengthening and could see a decent year in 2012. Unemployment has fallen below under 9%. Housing looks as if it may be bottoming, despite the huge inventories of foreclosed homes that lenders carry. Manufacturing has been one of the economy's brightest sectors. Automakers are selling cars.

Mike Jackson, the CEO of Autonation (AN +1.32%) told CNBC today that domestic auto sales would top 14 million units this year. The auto retailer saw record company revenue of $3.7 billion and earnings of 51 cents, Jackson said, with the biggest increase coming in new vehicles. Shares were up 67 cents to $37.01. Jackson based his bullishness on "leaner inventories" from automakers and, more importantly, "production that is coming in much closer aligned to what consumers actually want."

But much of the good cheer was tempered by a 2.2% drop in new-home sales, a seasonally adjusted rate of 307,000 units in December from 314,000 in November. Economists had expected an increase to 320,000. Builders were able to sell only about 302,000 for all of 2011. That's the worst level since the Census Bureau began compiling data in 1963. Homebuilder shares tumbled on the report. Toll Bros. (TOL -4.99%) slumped 78 cents to $22.45. Lennar (LEN -2.94%) fell 46 cents to $22.34. The Philadelphia Housing Sector Index ($HGX) was off 2 points to 118. It's still up 14% this month. In addition, jobless claims in the latest week rose to a seasonally adjusted 377,000 from 356,000, but the longer-term trend of lower claims levels remains intact.