Stocks manage to stay afloat

NEW YORK (CNNMoney.com) -- Major gauges remained higher Tuesday afternoon, helped by a drop in the price of oil by nearly $1, despite a pair of weaker than expected economic readings.

The Dow Jones industrial (up 57.55 to 13,409.60, Charts) average climbed 0.3 percent with 2-1/2 hours remaining in the session. The tech-laden Nasdaq (up 8.25 to 2,585.33, Charts) and the broader S&P 500 (up 3.98 to 1,501.72, Charts) moved about 0.2 percent higher.

Declining oil prices, which fell as far as $1.40 a barrel helped send stocks higher as U.S. light crude for August lost 93 cents to $68.25 a barrel on the New York Mercantile Exchange.

Stocks appeared to be unfazed by a pair of economic reports that missed forecasts including a new sales reading for May which fell 1.6 percent to 915,000 in May, and The Conference Board's consumer confidence index, which fell to its lowest level in 10 months.

But persistent worries on Wall Street about the larger impact big losses by Bear Stearns hedge funds invested in securities backed by subprime mortgages, which erased the Dow's 100-plus point gain Monday, kept investors on edge.

Barney Frank, chairman of the House Financial Services Committee, however, said Tuesday that the subprime problems that prompted Bear Stearns to rescue one of its hedge funds would not lead to larger problems in the financial markets, Reuters reported.

Market observers have speculated that the two funds are on the verge of collapse and similar problems could erupt elsewhere. There has also been speculation the situation could lead to a tightening of credit and ultimately disrupt the bond market.

M.E. Rhoades, associate director of private client research at D.A. Davidson & Co. said the market could find some upward momentum 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 earnings news. Analysts are forecasting improved results.

"If [Oracle] gives good guidance that could set things up for some form of a recovery," said Rhoades.

On the earnings front, Lennar (down $1.17 to $37.58, 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 $1.41 to $58.91, Charts) have reached an agreement in principle over the editorial independence of the Wall Street Journal, the paper 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 over 2 percent Tuesday on the New York Stock Exchange.

Shares of Blackstone Group (down $1.46 to $30.98, 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 at one point. Blackstone shares fell 4.5 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 $24.99 to $76.73, Charts), which makes systems used to diagnose and treat cancer and infectious diseases. Ventana shares soared 48 percent on the news.

An adviser to the Dutch Supreme Court said that ABN Amro (up $0.50 to $46.40, 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 $0.41 to $49.26, 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 $11.90 to $642.80 an ounce.

Market breadth was positive. On the New York Stock Exchange, winners barely beat losers on volume of 922 million shares. On the Nasdaq, advancers edged out decliners by the same ratio on volume of 1.19 billion shares.