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Stocks finished mostly higher, as banks and lenders such as LehmanBrothers Holdings recouped some of their recent losses, and as Fannie Mae and Freddie Mac continued their rebound, even withanother round of uninspiring housing and economic reports.

Sales of new homes rose 2.4% in July, but prices continued toslide, according to the Commerce Department. The S&P/Case-Shillerhome-price index told a similar story, hitting record lows in Juneand echoing an existing-home-sales report from Monday. In areflection of how intractable the housing problem has become, theFederal Reserve downgraded its outlook for the economy at its Aug....