NEW YORK (AP) -
Stocks wavered Tuesday, taking a break from a huge rally, as more signs of healing in the housing market and an uptick in consumer spending failed to spur buying.
The mixed trade comes after a three-week-long surge that catapulted the Standard & Poor's 500 index past the 1,000 mark on Monday for the first time since November.
Investors appeared little fazed by the day's earnings and economic news, and focused instead on locking in some profits following a 14 percent climb in the S&P 500 and Dow Jones industrials since July 10.
Stocks pulled off their lows and traded mixed after the National Association of Realtors reported a better-than-expected rise in pending home sales for a fifth straight month in June. Analysts said the market has already factored in an improving housing sector.
Earlier Tuesday, the Commerce Department said consumer spending rose 0.4 percent in June, slightly more than anticipated and the second straight monthly gain. But the report also showed that personal incomes, an indicator of future spending, dropped by a larger-than-expected 1.3 percent.
Among the day's earnings news, homebuilder D.R. Horton Inc. reported a smaller loss than the same period a year ago, beating Wall Street's estimates, while Toyota posted a smaller-than-expected loss and said it expects narrower losses for the year. That came a day after U.S. automakers reported better sales for July thanks to the government's wildly successful cash for clunkers program.
Investors have seen better-than-expected corporate earnings reports and encouraging outlooks this summer as well as data showing improvements in the manufacturing and housing industries. Those promising signs have driven hopes that the nearly two-year-long recession is coming to an end, pushing stocks up to levels not seen since last fall.
In late morning trading, the Dow Jones industrial average rose 0.84, or 0.01 percent, to 9,287.40. The Standard & Poor's 500 index slipped 0.43, or 0.04 percent, to 1,002.20, while the Nasdaq composite index fell 3.45, or 0.2 percent, to 2,005.16.
Analysts generally believe the market's near-term trajectory is upward, with investors seeing dips in stocks as an opportunity to put money to work, afraid of missing out on an extended rally.
"Everyone that I am talking to is interested in getting more money into the market," said Brian Bush, director of equity research at Stephens Inc. "People don't want to miss this market if it is going significantly higher."
The big question now though is what the market's next catalyst will be, especially in light of the looming jobs report on Friday.
Investors are more optimistic about the economy, and more confident in companies' ability to make money, than they were last fall at the peak of the financial crisis. But concerns about rising unemployment and the financial health of consumers have yet to subside.
Unemployment currently stands at a 26-year high of 9.5 percent, and that rate is expected to rise as high as 10 percent this year. Analysts warn that a huge negative surprise in the Labor Department's monthly jobs report on Friday could rattle the market.
"This market will be prone to pullbacks," said Janet Engels, senior vice president and director of private client research group at RBC Wealth Management. "I'm optimistic that the economic data has stabilized, I'm optimistic that earnings are beating expectations, but a return to growth is not necessarily a return to health."
On Monday, all major stock indexes rose more than 1 percent to fresh highs for the year, tacking on to July's big advance that sent the Dow up 725 points. The gains follow a month of wayward trading in June when investors questioned the validity of a spring rally that sent stocks up as much as 40 percent in a matter of months.
Despite the impressive gains, major indexes are still down 35 percent from their peak in October 2007.
Bond prices reversed early gains and fell. The yield on the benchmark 10-year Treasury note rose to 3.69 percent from 3.64 percent late Monday.
The dollar was mixed, while gold prices rose.
Oil prices retreated, falling $1.18 to $70.40 a barrel on the New York Mercantile Exchange.
Advancing stocks just narrowly outnumbered decliners on the New York Stock Exchange where volume came to 333.7 million shares compared with 375 million shares the same time a day earlier.
In other trading, the Russell 2000 index of smaller companies rose 1.09, or 0.2 percent, to 566.87.
Overseas, Japan's Nikkei stock average rose 0.2 percent, while Hong Kong's Hang Seng index dipped 0.1 percent. In afternoon trading, Britain's FTSE 100 fell 0.8 percent, Germany's DAX index fell 0.2 percent, and France's CAC-40 slipped 0.1 percent.
