Bulls battle back
Drop in price of oil by more than $1 a barrel keeps stocks afloat, despite weakened housing, confidence readings.
NEW YORK (CNNMoney.com) -- Stocks moved higher after struggling earlier in the session as a sharp drop in the price of oil outweighs new home sales and consumer sentiment readings that missed expectations.
The Dow Jones industrial (up 59.34 to 13,411.39, Charts) average climbed 0.6 percent just over 2 hours into the session. The tech-laden Nasdaq (up 6.64 to 2,583.72, Charts) and the broader S&P 500 (up 4.67 to 1,502.41, Charts) moved about 0.4 percent higher.
A drop in the price of oil by over $1 a barrel provided support to stocks as U.S. light crude for August lost $1.08 to $68.10 a barrel on the New York Mercantile Exchange.
Investors were closely watching the pace of new home sales, which fell 1.6 percent to 915,000 in May, the Commerce Department reported. Economists surveyed by Briefing.com forecast a decline in the annual pace of home sales to 925,000 homes, down from a 981,000 pace in April when sales were spurred by a large drop in prices.
Investors also digested the latest consumer confidence reading, which fell more than expected to its lowest level in 10 months. The Conference Board reported that its consumer sentiment index fell to 103.9 in June. Economists surveyed by Briefing.com were forecasting that index will slip to 106.
Stocks initially shrugged off the weak economic readings, but quickly gave back gains on persistent worries about the larger impact of the troubled subprime mortgage sector, said M.E. Rhoades, associate director of private client research at D.A. Davidson & Co.
"Looks like we keep hitting a resistance point," said Rhoades.
Renewed fears about big losses by hedge funds invested in securities backed by subprime mortgages sent stocks modestly lower Monday after rallying for most of the session.
A weak existing home sales report Monday soothed investor concerns that the Federal Reserve will begin raising interest rates anytime soon.
On the earnings front, if tech bellwether Oracle Corp. (down $0.12 to $19.36, Charts, Fortune 500), which is due to report results after the close Tuesday, delivers positive news, that could send stocks higher, said Rhoades. Analysts are forecasting improved results.
"If (Oracle ) gives good guidance that could set things up for some form of a recovery," she said.
Lennar (down $0.74 to $38.01, Charts, Fortune 500), the nation's largest home builder by revenue, reported an unexpected loss before the market open and warned of continued losses in the third quarter. Lennar shares fell over 2 percent on the New York Stock Exchange.
In corporate news, Rupert Murdoch's News Corp. (down $0.10 to $23.40, Charts, Fortune 500) and Dow Jones (up $0.89 to $58.39, Charts) could announce a deal over the editorial independence of the Wall Street Journal as early as today, the Journal reported.
Such an agreement would pave the way for News Corp. to buy Dow Jones. News Corp. has made a $5 billion bid for Dow Jones. Dow Jones shares jumped 2 percent higher on the New York Stock Exchange.
Shares of Blackstone Group (down $1.56 to $30.88, Charts) continued to fall Tuesday, after slipping nearly 8 percent Monday, as its stock dipped below its initial public offering price of $31 a share. Blackstone shares fell nearly 5 percent in midday trading.
Overseas, Swiss drugmaker Roche (up $0.40 to $85.70, Charts) made a hostile $3 billion bid late Tuesday for Ventana Medical Systems (up $25.23 to $76.97, Charts), which makes systems used to diagnose and treat cancer and infectious diseases. Ventana shares soared nearly 49 percent on the news.
An adviser to the Dutch Supreme Court said that ABN Amro (up $0.44 to $46.34, Charts) should not put the sale of the U.S. subsidiary LaSalle to a shareholder vote, a decision that could clear the way for Bank of America (up $0.35 to $49.20, Charts, Fortune 500) to buy LaSalle.
Treasury prices fell slightly, leaving the yield on the benchmark 10-year note at 5.09 percent level, up from 5.08 percent from late Monday.
COMEX gold for August fell $7.70 to $647 an ounce.