Stocks give up some ground after huge gains

NEW YORK -- A stock drop is never reassuring — except when it could have been worse.

The Dow Jones industrial average shed 115 points, or 1.5% on Tuesday. But it also held onto 382 of the 498 points it racked up a day earlier.

"We'll take that trading pattern any time," said Arthur Hogan, chief market analyst at Jefferies & Co. He said he came into work anticipating the Dow to drop 1% to 2% Tuesday after the index jumped 6.8% Monday— its biggest gain since late October.

The Dow was up more than 1,200 points after hitting nearly 12-year lows on March 9, and there was little in a way of positive economic or corporate data Tuesday to lift stocks further.

If Wall Street gets more good news, stocks could resume their rise. But if it doesn't, the rest of Monday's rally, and then some, could be wiped out. Investors have been cautious, recalling the 20% rise between late November and January that fizzled, with stocks then tumbling to new lows on fears about the economy and banking system.

Later this week, some big economic reports are scheduled to come out: durable goods for February, a revised fourth-quarter gross domestic product number, and personal income and spending for February. And next month, first-quarter earnings reports start pouring in.

Thomas Lee, a stock market analyst at JPMorgan, said the market's ability to hang on to most of its rally was encouraging. But, he added, "This has definitely been a show-me market."

The Dow fell 115.65, or 1.5%, to 7,660.21. The index fell in early trading, rose briefly in afternoon trading, and then turned lower again.

Broader stock indicators also tumbled. The Standard & Poor's 500 index fell 16.67 points, or 2%, to 806.25, and the Nasdaq fell 38.95 points, or 2.5%, to 1,516.81.

Before the market's retrenchment Tuesday, stocks had spiked about 20% over the course of 10 days on actions out of Washington and nascent signs of economic renewal.

Recent reports on retail sales, housing starts and inflation have all topped traders' bleak expectations. Last week, the Fed said it would buy long-term government debt to help drive down interest rates for home loans and credit cards. And the government sparked new hopes for further improvement Monday after it detailed plans for a mix of taxpayer and private money to help banks get rid of up to $1 trillion in bad loans from their books.