Blue chips inch higher

NEW YORK (CNNMoney.com) -- An upbeat housing market report helped lift the blue chips Friday afternoon, but gains were limited as investors worried about the ramifications of Iran seizing 15 British marines.

The Dow Jones industrial average (up 33.41 to 12,494.55, Charts) and the broader S&P 500 (up 3.12 to 1,437.66, Charts) index both added a few points 3 hours into the session. The Nasdaq (up 1.00 to 2,452.74, Charts) composite was little changed.

Stocks had struggled Thursday after the previous session's rally, which sparked after the Federal Reserve held interest rates steady and seemed to imply it was more likely to cut rates in the near term than raise them.

Stocks remained in transition mode Friday, with investors rewarding the housing market news, but remaining cautious about the latest from Iran.

"We got a good reaction right off the bat to the housing news, but that's faded a bit," said Tom Schrader, managing director of U.S. equity trading at Legg Mason.

"I think the market is a little jittery because of the Iran situation," he added. "That's caused the oil market to pop and it's raised worries about increased stress in a region of the world that's already stressed."

Existing home sales rose to a 6.69 million unit annual rate in February, topping forecasts for sales to fall to a 6.30 million unit annual rate from a 6.44 million unit rate in January. It was the biggest monthly gain in nearly 3 years.

However, the median price of a home dropped for the seventh straight month, reflecting the fact that the problems for the housing market are far from over.

Among stock movers, ImClone (up $3.90 to $37.78, Charts) surged 14 percent in unusually active Nasdaq trade on bets that sales of its cancer treatment Erbitux will benefit from a setback for rival Amgen.

Amgen (down $2.71 to $57.76, Charts) said it had cancelled a late-stage trial of its colon cancer treatment after finding that it hurt chances of survival. (Full story) Amgen shares lost 4.5 percent.

Shares of automakers gained. DaimlerChrysler (up $5.14 to $82.74, Charts) jumped on reports that auto parts supplier Magna and a private equity partner may have offered to buy its Chrysler unit for as much as $4.7 billion. (Full story)

General Motors (up $1.34 to $31.66, Charts) jumped after saying it will pay stock bonuses to its top executives for the first time since 2003, reflecting the company's recent turnaround efforts. The company reported a fourth-quarter profit last week.

Ford Motor (up $0.01 to $8.09, Charts) gained too.

In other news, Citigroup (down $0.04 to $51.80, Charts) may be considering making a rival offer for Dutch bank ABN Amro, which is already in discussions with British bank Barclays about a potential merger.

Market breadth was narrowly positive. On the New York Stock Exchange, winners topped losers four to three on volume of 590 million shares. On the Nasdaq, advancers barely edged decliners on volume of 760 million shares.

U.S. light crude oil for May delivery rose 86 cents to $62.55 a barrel on the New York Mercantile Exchange on the reports that 15 British naval personnel have been seized by Iran.

That gave a lift to a variety of oil services stocks, including Exxon Mobil (up $0.91 to $75.27, Charts), Valero Energy (up $0.92 to $63.62, Charts) and Sunoco (up $1.44 to $71.75, Charts). The Amex Oil (up 12.87 to 1,215.01, Charts) index added 1.2 percent.

But other commodity stocks were weaker, including gold and silver companies.

COMEX gold for April delivery fell $6.90 to $657.30 an ounce.

Treasury prices slumped, raising the yield on the 10-year note to about 4.60 percent from 4.58 percent late Thursday. Bond prices and yields move in opposite directions.

In currency trading, the dollar gained versus the euro and rose versus the yen.

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