Stocks jump as oil slides
Wall Street gains in a choppy session as investors welcome falling crude oil prices and a stronger dollar.
NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, as falling oil prices and a stronger dollar gave investors the incentive to scoop up stocks after a long holiday weekend.
The Dow Jones industrial average (INDU) added 0.6% and the broader Standard & Poor's 500 (SPX) index gained 0.7%, while the Nasdaq composite (COMP) added 1.5%.
Stocks tanked last week, ahead of the holiday, and that factor as much as anything probably set the market up for an advance Tuesday, said Ron Kiddoo, chief investment officer at Cozad Asset Management.
"Unless we had terrible news today, we were probably set up to get a bounce today, after last week's big selloff," Kiddoo said. "And the lower oil prices are helping."
Stocks had been mixed to higher through the early afternoon as investors eyed the drop in oil prices and sorted through the economic news, including reports showing a surprise rise in new-home sales and the worst drop in home sale prices in 20 years.
While the steep drop in home sale prices was a standout, a lot of the problems in the real estate market have already been priced into stocks, said Matt King, chief investment officer at Bell Investment Advisors.
After a two-month rally off the March 17th lows and a nearly two-week selloff, stocks are basically pausing, he said.
"Investors are taking a cautious approach and are keeping an eye on any news about growth in the second quarter," King said. "We know growth was slow, but we don't know how slow. So stocks are going to react to any news on that, and on inflation, over the next few weeks."
Wednesday's one economic report is the April reading on durable goods orders, due out before the start of trade.
Economic news: April new-home sales rose 3.3% from a revised reading in the previous month, the government reported. The advance topped expectations, but kept sales near historically low levels. (Full story).
Another housing report was more dour. The S&P/Case-Shiller national home price index slumped 14.1% in the first quarter, a record decline. (Full story).
A separate report showed that consumer confidence fell more than expected in April, touching a more than 16-year low.
Stocks tumbled Friday, at the end of a down week, on spiking oil prices and another weak housing market report ahead of the three-day holiday weekend, with all markets closed Monday for Memorial Day.
Company news: The Nasdaq climbed thanks to strength in big tech stocks such as Google (GOOG, Fortune 500), Oracle (ORCL, Fortune 500) and Apple (AAPL, Fortune 500).
Apple shares rose on continued anticipation about the late-June launch of the new version of its iPhone. On Tuesday the company said TeliaSonera will release the iPhone in a number of Nordic and Baltic markets. (Full story).
General Motors (GM, Fortune 500) fell 1% after a Citi Investment Research analyst downgraded the stock to "hold" from "buy" and cut its 12-month price target as part of a broader bearish note on the auto sector, amid weaker sales and surging commodity prices.
Ford Motor (F, Fortune 500) also had its earnings estimates cut by Citi. Shares fell 1%.
UBS (UBS) shares plunged 13.3% after the company warned late Monday that it may have to take more writedowns on international real estate, at the same time that it is looking to raise almost $16 billion in additional funds from shareholders.
Market breadth was positive. On the New York Stock Exchange, winners topped losers 3 to 2 on volume of 1.13 billion shares. On the Nasdaq, advancers topped decliners 2 to 1 on volume of 1.76 billion shares.
Oil and gold prices back off: U.S. light crude oil for July delivery fell $3.34 to settle at $128.85 a barrel on the New York Mercantile Exchange, retreating as the dollar firmed up. A stronger U.S. currency makes dollar-traded commodities like oil more expensive for international buyers.
Gold also retreated in response to the stronger dollar. COMEX gold for August delivery fell $17.80 to settle at $912.80 an ounce.
Gas hits 20th record high: The national average price for a gallon of regular unleaded gas rose to a record $3.937 from the previous day's record of $3.936, AAA reported.
Other markets: The dollar gained versus the euro and yen.
Treasury prices fell, raising the yield on the 10-year note to 3.92% from 3.87% late Friday. Bond prices and yields move in opposite directions. 
