Markets make a modest come back

NEW YORK (CNNMoney.com) -- Stocks inched higher Wednesday, at the end of a lackluster session, as news that another troubled financial firm had scored a capital infusion helped counter reports of disappointing holiday retail sales and a steep drop in housing prices.

The Dow Jones industrial average (INDU) and the broader S&P 500 (SPX.X) index each gained a few points. The tech-laden Nasdaq (COMPX) was up more than 0.4 percent.

Treasury prices sank. The dollar fell against the euro but gained against the yen. Oil and gold prices rose.

Stocks opened lower Wednesday after posting some modest gains in Monday's shortened session. Markets were closed Tuesday for Christmas.

The number of shares trading hands Wednesday was unusually low since many traders are on vacation.

Thursday will see reports from the government on consumer confidence, factory orders and jobless claims.

Markets moved toward positive territory Wednesday after money management firm Davis Selected Advisors disclosed a 5.1% passive stake in troubled bond insurer MBIA (MBI), which has seen its credit rating threatened because of its exposure to subprime related securities. MBIA's stock jumped nearly 10 percent in late-day trading.

On Monday, Davis Selected Advisors took a $1.2 billion stake in Merrill Lynch & Co.

"The big story of the day is Davis Advisors' stake in MBIA - once that crossed, things got going," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

Shares of other bond insurers, Ambac Financial Group (ABK) and PMI Group (PMI), also traded higher Wednesday afternoon.

Earlier in the session, investors fretted over signs that retail sales for the holiday season were less robust than expected.

Some early tallies this week from ShopperTrak and MasterCard Advisors said holiday sales came in short of the National Retail Federation's forecast, at 3.6 percent growth.

Target, one of the nation's largest retailers, warned Monday that December sales will come in lower than expected. Early Tuesday, a Goldman Sachs analyst lowered her outlook for the retail giant. Target's (TGT, Fortune 500) stock fell nearly 3 percent.

Wal-Mart's (WMT, Fortune 500) stock fell slightly while shares of Macy's (M, Fortune 500) were trading down almost 4 percent.

However, the final numbers for online sales and gift cards have not yet been calculated, which could improve the holiday sales picture.

The housing sector was also hit with bad news, as a S&P/Case-Shiller report released early Wednesday found that home prices fell a record 6.7 percent in October, highlighting the softness in the housing market.

Shares of luxury homebuilder, Hovnanian Enterprises (HOV, Fortune 500), which has been battered by the housing market downturn, lost nearly 2 percent.

Other homebuilders including D.R. Horton (DHI, Fortune 500), and Toll Brothers (TOL, Fortune 500) and were also slightly lower Wednesday afternoon.

On the Nasdaq, shares of Evergreen Solar (ESLR) were up more than 13 percent, extending a rally from the previous session.

Other technology stocks were ahead, including BlackBerry maker Research In Motion (RIMM) and Apple (APPL).

Market breadth was mixed. On the Dow, losers beat winners by a slim margin on a volume of 839 million shares. On the Nasdaq, advancers beat decliners by four to three on a volume of 1.23 billion shares.

Treasury prices fell, with the yield on the 10-year note climbing to 4.28, up from 4.21 on Monday. Bond prices and yields move in opposite directions.

U.S. light crude oil for January delivery rose $1.84 cents to $95.97 on the New York Mercantile Exchange.

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

COMEX gold for February delivery rose $13 to $829.50 an ounce.