Stocks muster gains; Nasdaq at 18-month high

NEW YORK (CNNMoney.com) -- Stocks managed gains Tuesday at the end of a choppy session as investors mulled the latest corporate deal and profit news on the anniversary of the bear-market bottom.

The Dow Jones industrial average (INDU) added nearly 12 points, or 0.1%. The S&P 500 index (SPX) added less than two points. Both closed at 6-week highs.

The Nasdaq composite (COMP) gained 8 points, or 0.4%, ending at a fresh 18-month high.

A stock advance fizzled out Tuesday, one year after what many consider to be the bottom of the bear market.

On March 9, 2009, the Dow ended at a 12-year low of 6,547.05, as months of stock weakness in response to the financial market crisis pushed the blue-chip average to its nadir. Since then, the Dow has gained 61.2% through Monday's close, ending at 10,552.52.

In the same time period, the S&P 500 gained 68%, bouncing off of 12-1/2 year lows. The Nasdaq's gain of 84% was off of six-year lows. The gains were fueled by bets on an economic recovery and the impact of trillions of dollars of government stimulus injected into the system.

But the pace of the advance has slowed this year, as investors have gone from pricing in an economic recovery to waiting for evidence that the recovery has legs. A still-abysmal job market and ongoing weakness in housing and consumer spending have dragged on sentiment.

Worries about a European debt crisis and the impact of China slowing its growth have also been in play.

But the ongoing skepticism of the so-called average investor, or retail investor, continues to give the market some support.

"You've seen this massive rally over the last year, but it hasn't coincided with the retail investor really participating," said Larry Glazer, managing director at Mayflower Advisors.

He pointed to mutual fund flow information that shows investors are still pouring substantially more money into lower-yielding bond funds than stock funds, a trend that was evident throughout the rally last year. Also, nervous investors who dump stocks for cash or cash equivalents are getting minimal or non-existent returns, he said.

"The retail investor skepticism could prolong the market advance because there is so much potential that they haven't tapped into yet," he said.

Stocks ended little changed Monday after AIG (AIG, Fortune 500) sold its American Life Insurance unit to MetLife (MET, Fortune 500) in a $15.5 billion cash-and-stock deal. Typically, such deals would spark a bigger stock market advance, but investors were wary after pushing stocks higher for three of the last four weeks.

Corporate news: AIG (AIG, Fortune 500) shares rallied for a second day in a row. Other financial gainers included Citigroup (C, Fortune 500), Fannie Mae (FNM, Fortune 500) and Freddie Mac (FNM, Fortune 500).

Cisco Systems (CSCO, Fortune 500) said it is introducing a new Internet router that will power the most heavily-trafficked parts of the web at twelve times the speed of its competitors. Cisco shares were little changed on the news, but the stock was heavily traded, with over $150 million shares changing hands.

Texas Instruments (TXN, Fortune 500) updated its first-quarter profit estimates late Monday, saying it expects to earn between 48 cents and 52 cents per share on revenue of $3.07 billion to $3.19 billion.

The new forecast was an improvement over the chipmaker's earlier forecast, but investors took a "sell the news" approach, sending shares 2% lower.

Northrop Grumman (NOC, Fortune 500) dropped out of the competition late Monday to build tanker planes for the U.S. Air Force, leaving Boeing (BA, Fortune 500) the only bidder in a contract that could be worth as much as $50 billion.

Merck (MRK, Fortune 500) and Sanofi-Aventis (SNY) said they are combining their animal health care businesses to create one of the biggest in the world. The combined business will have about a 29% market share in a global market worth around $19 billion. Merck shares fell and Sanofi-Aventis shares were little changed.

World Markets: In overseas trading, European markets ended mixed, with London's FTSE 100 down 0.1%, Germany's DAX up 0.2% and France's CAC 40 up 0.2%. Most Asian markets ended higher, with the exception of Japan's Nikkei, which finished lower.

The dollar and commodities: The dollar gained versus the euro and fell versus the yen.

U.S. light crude oil for April delivery dipped 38 cents to settle at $81.49 a barrel on the New York Mercantile Exchange.

COMEX gold for May delivery fell $1.70 to settle at $1,122.90 per ounce.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.69% from 3.71% late Monday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by nine to seven on volume of 1.12 billion shares. On the Nasdaq, advancers topped decliners by seven to six on volume of 2.57 billion shares.