NEW YORK (CNN/Money) -
U.S. stocks shrugged off concerns about potential oil supply disruptions and closed higher Tuesday following a weekend terrorist attack in Saudi Arabia that pushed crude prices above $42 a barrel.
Stocks posted solid declines with about an hour of trading left, but pared those losses to close slightly higher. The Dow Jones Industrial average (up 14.20 to 10202.65, Charts) gained about 0.14 percent, the Nasdaq composite (up 4.03 to 1990.77, Charts) rose about 0.2 percent, and the Standard & Poor's 500 (up 0.52 to 1121.20, Charts) also added about 0.05 percent.
The attack in the Saudi oil city of Khobar rattled world oil markets after it left 22 people dead. It sent NYMEX light sweet crude futures for July delivery up $2.44 to close at $42.32 a barrel -- a record high.
"Closing above $42 is scary," said Phil Flynn, energy analyst with Alaron Trading. "It has a clear path to the next level, which is $44 a barrel."
Before the attack, oil had fallen below $40 a barrel just ahead of the Memorial Day weekend, which kicked off the U.S. summer driving season.
The markets posted solid gains last week, breaking out of a string of lackluster sessions as investors remained concerned about the timing and size of a looming interest rate hike by the Federal Reserve.
"The Fed will take the rising price of oil into consideration when it meets," said Art Hogan, chief market strategist with Jefferies & Co. "The market is still pricing in a rate hike at the end of June, but the question becomes what happens if oil stays above $42 a barrel."
The economic news released Tuesday pointed to the possible return of inflation amid the economic recovery, as a report showed that U.S. manufacturing continues to recover from a prolonged slump and construction remains strong.
The Institute for Supply Management (ISM) said its index of manufacturing activity rose to 62.8 in May from a revised 62.4 the prior month. Economists, on average, expected an ISM index of 61.5, according to Briefing.com.
In addition, U.S. construction spending climbed 1.3 percent in April to a seasonally adjusted $970.39 billion annual rate, a third consecutive record high as builders moved to complete projects with the improving weather and rising mortgage rates, a government report showed. Economists had expected a rise of 0.4 percent, according to Briefing.com.
Friday's report on the May unemployment rate and payroll figures will also be closely watched for a possible indication of what the Federal Reserve may do when it meets at the end of June.
Here's what was moving near the close:
Here's a few stocks that were moving before the closing bell Tuesday.
Mel Karmazin resigned as president and chief operating officer of media conglomerate Viacom Corp. (VIA: down $0.46 to $36.81, Research, Estimates) The company also announced that Chairman and CEO Sumner Redstone, the company's largest shareholder, has indicated that he will relinquish his role as CEO within three years.
Shares of Qwest Communications (Q: down $0.03 to $3.72, Research, Estimates) climbed after long-distance carrier MCI Inc. struck a deal Monday to lease access to Qwest's local telephone network, the first major agreement since a federal appeals court threw out government access rules.
General Electric (GE: down $0.08 to $31.04, Research, Estimates) fell after its GE Energy unit said it agreed to buy industrial equipment firm BHA Group (BHAG: up $5.13 to $37.72, Research, Estimates) for $260 million to $38 per share.
Accenture (ACN: up $0.75 to $25.36, Research, Estimates) gained 3 percent after the U.S. Homeland Security Department awarded a team led by the consulting firm a contract that may eventually reach a value of up to $10 billion.
In the tech sector, shares of Sun Microsystems (SUNW: up $0.16 to $4.33, Research, Estimates) rose nearly 3 percent after the computer networking company said it sees $1 billion in sales in China.
Market breadth was positive both on the Nasdaq, where slightly over 1.4 billion shares changed hands, and on the New York Stock Exchange, where 1.2 billion shares traded.
U.S. Treasurys fell, pushing the yield on the benchmark 10-year note to 4.70 percent, up from 4.60 percent late last week, and the dollar fell against the euro and the yen.
In international trading, stocks finished mixed in Asia overnight and fell in Europe.
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