Bulls, bears in standoff

NEW YORK (CNNMoney.com) -- Wall Street embraced a $22.5 billion stock buyback plan by Home Depot and dip in the price of oil, but major gauges remained mixed Tuesday as Treasury yields started to creep higher.

The Dow Jones industrial average (up 12.44 to 13,647.86, Charts) rose about 0.2 percent about 2-1/2 hours into the session. The broader S&P 500 (down 2.19 to 1,531.51, Charts) index straddled the breakeven point and the tech-laden Nasdaq (up 0.62 to 2,627.38, Charts) composite index rose 0.1 percent.

Video More video

Home Depot (up $2.57 to $40.84, Charts, Fortune 500) shares soared over 7 percent in morning trade after the home improvement retailer announced late Tuesday a plan to repurchase $22.5 billion worth of stock. It also said it would sell its building supply unit to a group of private equity firms for $10.3 billion.

Oil prices moved lower, adding support, after the government reported that weekly crude and gasoline supplies rose much more than expected. U.S. light crude for July delivery fell 80 cents to $68.30 a barrel.

Treasury yields, which helped put stocks into positive territory during Tuesday's session, crept higher with the 10-year benchmark yielding 5.10 percent, up from 5.08 percent Tuesday.

On the earnings front, Morgan Stanley reported better-than-expected second-quarter earnings that jumped 40 percent. Net income and revenue handily beat analysts' estimates, sending Morgan Stanley (up $1.91 to $89.71, Charts, Fortune 500) shares up almost 2 percent in morning trade on the New York Stock Exchange.

Package delivery company FedEx (up $2.42 to $110.48, Charts, Fortune 500) barely beat analyst estimates, sending its shares over 2 percent higher.

And consumer electronics retailer Circuit City Stores Inc. (down $0.06 to $16.01, Charts, Fortune 500) reported disappointing profits and warned about future earnings growth.

Without any major economic reports issued Wednesday, stocks failed to find any momentum.

Hugh Johnson, chairman of asset management company Johnson Illington Advisors, also blamed the market's recent sideways movement on investor speculation that the market is overvalued at a time when both the economy and earnings growth is slowing.

"Investors are becoming somewhat cautious because stocks are now overvalued," said Johnson. "The point is we've come too far too fast."

In major corporate news, two Bear Stearns (down $1.48 to $145.31, Charts, Fortune 500) hedge funds heavily invested in securities backed by subprime mortgages are close to being shut down, with Merrill Lynch seizing assets, according to a report in The Wall Street Journal.

Shares of the mutual fund manger Nuveen Investments (up $8.99 to $63.15, Charts) soared over 16 percent after the company agreed to a $5.75 billion buyout by a group of investors led by private equity firm Madison Dearborn Partners LLC.

Billionaire investor Kirk Kerkorian's Tracinda Corp. said Wednesday it was no longer interested in purchasing assets of the casino operator MGM Mirage, which include the Bellagio and City Center properties. MGM (down $5.45 to $81.06, Charts, Fortune 500) shares tumbled over 8 percent on the news.

Rupert Murdoch's News Corp. (up $0.24 to $23.92, Charts, Fortune 500) may swap its social networking site MySpace for a 25 percent stake in the No. 2 search engine Yahoo (up $0.35 to $27.98, Charts, Fortune 500), a newspaper reported.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by nearly 4 to 3 on volume of 515 million shares. On the Nasdaq, decliners beat advancers 5 to 4 on volume of 656 million shares.

In currency trading, the dollar eased against the euro, but was higher versus the yen.

COMEX gold for August delivery fell $3.70 to $661 an ounce.

Overseas markets were lifted by easing concerns about rising bond yields. European stocks moved higher in midday trade, while Asian markets rose, with the Hong Kong index hitting a new trading high.