Rising Commodities, Dealmaking Lift Stocks

Analysts said a break in the advance could ease worries that the market has advanced too quickly.

"This is a much-needed healthy pause and reassessment. It ran so far," said David Darst, chief investment strategist for Morgan Stanley Smith Barney in New York.

The Dow fell 17.53, or 0.2 percent, to 9,771.91, after being down as much as 86 points. The Dow rose 77 points Monday following reports of improvements in manufacturing and housing.

The broader Standard & Poor's 500 index rose 2.53, or 0.2 percent, to 1,045.41. The index is up 54.5 percent from a 12-year low in early March.

The Nasdaq composite index rose 8.12, or 0.4 percent, to 2,057.32.

"We're seeing a natural ebb and flow of risk appetite," said Kevin Gardiner, head of investment strategy for Europe, Middle East and Africa at Barclays Wealth.

Analysts expect trading to be choppy this week, as investors digest a frenzy economic reports. Investors are watching the Federal Reserve, which concludes a two-day meeting Wednesday, for any clues about the economy and the direction of interest rates.

Investors also looked past increases in automobile sales. Ford Motor Co. said sales rose 3 percent from October last year, while General Motors Corp.'s sales rose 4.7 percent. It was the first monthly sales increase for the nation's largest automaker since January 2008. Meanwhile, Chrysler's sales fell 30 percent, though they improved from September.

Bond prices fell as stocks rose, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.47 percent from 3.42 percent late Monday.

The dollar was mixed against other major currencies.

Crude oil rose $1.47 to settle at $79.60 a barrel on the New York Mercantile Exchange, while gold surged to a new high of $1,087 an ounce.

Shares of Burlington Northern jumped $20.93, or 27.5 percent, to $97 after the move by Buffett's Berkshire Hathaway Inc., which already owns about 22 percent of Burlington.