NEW YORK (CNN/Money) - U.S. stocks squeezed out small gains Tuesday, after sticking to a narrow trading range throughout the day, as investors cheered some stronger-than-expected economic data and struggled with the temptation to take profits.

The Nasdaq composite (up 1.86 to 1668.44, Charts) and the S&P 500 (up 0.92 to 1011.66, Charts) rose about 0.1 percent. The Dow Jones industrial average (up 4.06 to 9323.02, Charts) gained a little more than 4 points. All three index are at their highest levels in about a year.

"It seems to me that the market is stabilizing, but the undertone is a negative one," said Peter Green, market analyst at MKM Partners. "After yesterday's advance, you'd think there would be some follow through. It seems to me the market is tired and due for a rest."

Wall Street's belief that an economic recovery is bound to happen in the second half of the year held strong Tuesday, supported by the morning's data. Economic reports on housing, industrial production and consumer prices all came in better than expected by economists, boosting investor optimism even further.

But after Monday's strong rally -- which drove the three major indexes up more than 2 percent each and pushed the S&P 500 above 1,000 for the first time in nearly a year -- some investors couldn't resist taking profits.

Without any major economic reports to consider, investors likely will continue to regroup Wednesday and to look ahead to reports on weekly jobless claims, leading indicators and data from the Philly Fed on regional manufacturing, due Thursday.

Wednesday, investors also will get to ponder earnings reports from electronics retailer Best Buy (BBY: up $0.18 to $44.17, Research, Estimates) and financial services firm Bear Stearns (BSC: down $0.07 to $82.48, Research, Estimates), among others.

Before the opening bell, the government said consumer prices for May were unchanged after falling 0.3 percent in April. Economists surveyed by Briefing.com expected the Consumer Price Index to decline 0.1 percent. Excluding volatile food and energy costs, the "core" CPI rose 0.3 percent, compared with economists' expected 0.1 percent rise.

Fear of deflation has been lingering in the market for months now, pushing bond yields lower as the Federal Reserve suggested it would keep interest rates low for a long time and the Bush administration appeared to ease its strong dollar policy. The stronger-than-expected CPI reading only served to ease whatever deflationary concerns might have been lurking in the market's mind.

Separately, housing starts jumped 6.1 percent in May to an annual rate of 1.788 million units, which was up from 1.63 million in April and better than the 1.7 million level economists surveyed by Briefing.com were expecting.

Also before the start of trading, the government said the nation's industrial production rose 0.1 percent, better than the flat reading forecast by economists and the 0.5 percent slide in April. Capacity utilization held at 74.4 percent, as expected by economists.

But, despite evidence of a renewed economic recovery, some traders urged longer-term investors to be cautious.

"I'm somewhat in the cautious camp," said Ram Kolluri, chief investment officer at GlobalValue Investors. "The rally may continue, but this is exactly how we felt in 1999 and 2000 before we started questioning earnings. I feel there is going to be a reality check somewhere."

Some traders also said they expect that stocks would have shown a greater decline Tuesday, were the end of the quarter not nearing. As the end of the quarter approaches, some portfolio managers tend to buy up issues that are doing well, a practice dubbed "window dressing," to improve their numbers.

On the corporate side, shares of AT&T (T: down $1.01 to $20.05, Research, Estimates) dropped 4.8 percent, pressuring the Dow, after Merrill Lynch cut its investment rating on the company to "sell" from "neutral."

But fellow Dow member Microsoft (MSFT: Research, Estimates) gave the blue-chip index support, rising 2.2 percent, after news that West Virginia has agreed to settle its antitrust case against the company.

Coca-Cola (KO: down $1.00 to $47.20, Research, Estimates) also lost ground, dipping 2.1 percent, after saying it would take a $9 million pretax charge after an audit revealed accounting problems.

Meanwhile, shares of Pfizer (PFE: up $1.58 to $36.18, Research, Estimates) rose for the second day in a row, adding another 4.6 percent after the company raised its profit and sales outlook and unveiled a new drug that could help smokers quit. This came on the back of positive news about Pfizer's cholesterol-fighting blockbuster, Lipitor, which lifted the stock 4.6 percent Monday.

Gold stocks also showed some strength, with the metal itself soaring in price, up $4.10 to $363.80 an ounce. Shares of Newmont Mining (NEM: up $1.42 to $33.84, Research, Estimates) jumped 4.4 percent, Goldcorp (GG: up $0.60 to $12.35, Research, Estimates) rose 5.1 percent, and Kinross Gold (KGC: up $0.40 to $7.39, Research, Estimates) edged up 5.7 percent.

Market breadth was mixed, with losers beating gainers by about a five-to-three margin on the New York Stock Exchange, where volume stood at 1.5 billion shares. On the Nasdaq, advancing stocks edged out decliners while 1.9 billion shares changed hands.

Bonds fell, the 10-year Treasury note losing 24/32 of a point in price and its yield rising to 3.26 percent. The dollar showed modest strength against the yen and was little changed versus the euro.

Light crude futures lost 9 cents to $29.48 a barrel in New York.

European stock markets closed the day higher, as did Asian stocks overnight.