Stocks rise despite housing disappointment

NEW YORK -- Investors hesitantly moved back into the market Tuesday, joining in a worldwide rebound from the previous day's big sell-off.

Stocks were moderately higher in early trading following gains in overseas markets that were driven by upbeat economic news from Germany. A research institute has reported that consumer confidence is rising in that country, Europe's largest economy.

However, there is still much uncertainty in the U.S. The market's gains are being held in check by mixed earnings reports from retailers and a government report showing construction of new U.S. homes fell more than expected in July.

Earnings results from retailers on Tuesday show American consumers are still wary of spending. Home Depot joined other retailers in reporting a drop in its sales.

The world's largest home improvement retailer said its second-quarter profit fell 7%, but its adjusted results beat Wall Street's expectations, as cost cuts partly offset weak revenue. Home Depot also lifted its guidance for full-year earnings.

Meanwhile, the Commerce Department reported that construction of new U.S. homes fell 1% in July, missing analysts' expectations.

Some recovery was to be expected after Monday's big drop, which took the Dow Jones industrials down 186 points. Stocks fell sharply and bond prices soared on growing fears that nervous consumers won't spend enough to lift the economy into recovery.

Overseas, Japan's Nikkei stock average rose 0.2%. In afternoon trading, Britain's FTSE 100 was up 0.9%, while Germany's DAX index and France's CAC-40 were up 0.6%.

The dollar fell against other major currencies, while gold prices rose.