The stock market managed to carve out modest gains amid news of a rebound in consumer confidence and more healing in the housing industry.
Financials, retailers and homebuilders were the day's biggest winners. A sharp drop in energy stocks kept a lid on the market's advance.
While investors were pleased by positive reports on consumers and housing, trading was choppy, as it has been in recent sessions.
The Dow Jones industrial average surged more than 100 points immediately after the confidence report was released, but came off its highs shortly after. The blue-chip index closed at 9,539.29, up 30.01, or 0.32%. The other major stock indexes also pulled back. The Standard & Poor's 500 index finished at 1,028.00, up 2.43, or 0.24%. The Nasdaq composite index rose 6.25, or 0.31%, to 2,024.23.
The Conference Board's consumer confidence index rose to 54.1 this month from an upwardly revised 47.4 in July and far above the 47.5 reading analysts expected.
Despite the improvement, the reading is still a long way from showing that consumers are actually feeling optimistic about the economy, which is vital to any potential recovery. Investors' concerns about flagging consumer confidence have triggered bouts of stock selling in recent weeks.
Stocks got a boost from President Obama's reappointment of Bernanke as Federal Reserve chairman and a jump in home prices.
Bernanke's reappointment, though expected, came sooner than anticipated and removed any uncertainty about a potential replacement. Bernanke's aggressive moves to limit the damage from the financial crisis, including keeping interest rates at historic lows, have been credited with guiding the economy away from its worst recession since the 1930s.
Meanwhile, the Standard & Poor's/Case-Shiller U.S. National Home Price Index rose 1.4% in the second quarter from the January-March period, the first quarterly increase in three years. Home prices, while still down almost 15% from last year, are at levels last seen in early 2003.
The improvements in consumer confidence and housing are related. If consumers are feeling better about the economy, they will be willing to spend a little more on houses, not to mention cars, appliances and other goods and materials. Investors' concerns about flagging consumer confidence have triggered bouts of stock selling in recent weeks.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 852.3 million shares, compared with 912.3 million at the same time on Monday.
In other trading, the Russell 2000 index of smaller companies rose 2.98, or 0.5%, to 583.22.
A sharp drop in oil kept a lid on the market's gains. Oil prices tumbled $2.32 to settle at $72.02 a barrel on the New York Mercantile Exchange, bringing energy-related stocks down with them. Halliburton Co. fell 88 cents, or 3.5%, to $24.40. Chesapeake Energy Corp. lost 52 cents, or 2.2%, to $23.42.
The moderate advance on Tuesday follow a trend seen in the market throughout the summer, where any dip in stocks or pause in trading is met with more buying as investors fear missing out on an extended rally.
Despite improving economic data, the market is still generally cautious. After a 52% climb in the S&P 500 since early March, investors are questioning how much further stocks have to go, especially in the absence of data showing actual growth in the economy.