NEW YORK (CNN/Money) - Stocks clawed their way back from big losses to end with small gains Tuesday, despite worries about Iraq and North Korea and the weakest reading on consumer confidence in more than nine years.

Without any major economic reports Wednesday, investors could find themselves paralyzed by lingering war worries, and fretting as well about Hewlett-Packard, which reported higher earnings but sales that missed forecasts after Tuesday's closing bell.

The Dow Jones industrial average (up 51.26 to 7909.50, Charts) rose 0.65 percent and the Nasdaq composite (up 6.60 to 1328.98, Charts) ended the day up 0.5 percent. The S&P 500 index (up 5.99 to 838.57, Charts) rose 0.72 percent. All three indexes slipped Monday as war worries sent investors scurrying for safety.

Traders attributed the rally in the last hour of trading to prices tempting buyers in an oversold market.

"Really there's no news that would account for the lift," said Angel Mata, head of equity trading at Legg Mason. "It was an oversold rally fused by short covering." Short sellers try to profit by selling shares and buying them back more cheaply later, but if prices start rising, they may be forced to buy to repay the stock loans.

As rival resolutions about Iraq circulated at the United Nations, North Korea tested a missile over the Sea of Japan, and investors were treated to more uncertainty. Wall Street has been suffering from a case of geopolitical anxiety for months, which has depressed stocks and boosted Treasury bonds, gold and other "safe haven" investments.

The latest reading on consumer confidence in the United States was no help. The Conference Board's consumer confidence index tumbled to 64 in February, the lowest since October 1993, from a revised 78.8 in January. Economists had forecast a reading of 77, according to Briefing.com.

"I think that consumer confidence number really shocked a lot of people," said David Briggs, head of equity trading at Federated Investors. "Because if consumers aren't going to hold this economy up -- the bad news just keeps on coming."

Still, consumers kept buying houses in January. According to the National Association of Realtors, existing homes sold at a seasonally adjusted annual rate of 6.09 million units, up from a 5.86-million-unit pace in December. Economists, on average, expected a 5-million-unit pace, according to Briefing.com.

While investors won't have major economic news on Wednesday, they will react to earnings from Hewlett-Packard.

After the bell Tuesday, Dow component Hewlett-Packard (HPQ: up $0.43 to $18.18, Research, Estimates) posted earnings of 29 cents a share, a penny better than forecasts, but said sales slipped to $17.9 billion, missing analysts' estimates, sending its shares down about 4 percent in after-hours trading.

In the latest twist of the Iraq crisis, the United States, backed by Britain, Spain and Bulgaria, submitted a new resolution with regard to the Iraq situation to the U.N. Security Council for consideration. By stating that Iraqi President Saddam Hussein has not complied with U.N. disarmament edicts, the proposal opens the door for a possible military attack on Baghdad.

Meanwhile, France, Germany and Russia, long opponents of an armed conflict with Iraq, submitted a resolution of their own that calls for beefed-up arms inspections and peaceful disarmament.

Separately Hussein, in a CBS "60 Minutes" interview that has yet to air, called for a public debate with President Bush, something the White House promptly rejected. Hussein also reportedly said in the interview that he does not think the country's Al Samoud-2 missiles violate U.N. restrictions and therefore he will not destroy them. The United Nations' chief weapons inspector, Hans Blix, has given Baghdad until Saturday to begin dismantling the missiles. (For the latest news about the Iraq crisis, click here.)

With war seemingly inevitable, traders were starting to question whether the market could see sustained relief once the fighting starts, as happened during the Gulf War in 1991.

Federated Investors' Briggs said it seems there's no buying power right now, and that surveys and reports are showing that traders have about 5 percent in cash, on average, as compared with about 10 percent before the Gulf War.

"I'm just starting to get this bad feeling again," Briggs said. "History may not repeat itself this time."

On the other side of the globe, North Korea test-launched a missile over the Sea of Japan just as South Korea was inaugurating its new president, an event attended by U.S. Secretary of State Colin Powell. The action renewed investors' concerns first triggered weeks ago when North Korea said it was planning to reopen its nuclear weapons development program.

With all that in mind, investors chose to sit tight. Still, market breadth turned around on the New York Stock Exchange, where gainers took the lead over losers by about a 9-to-7 margin as 1.5 billion shares changed hands. On the Nasdaq, declining stocks edged past winners on volume of 1.4 billion shares.

Amid the general lightening of stock portfolios, the market paid little attention to individual corporate news.

But Dow component Home Depot (HD: up $0.66 to $22.84, Research, Estimates), which reported better-than-expected earnings, although the expectations had been lowered, managed to recover from an earlier slump to close almost 3 percent higher.

Shares of Cisco Systems (CSCO: down $0.34 to $14.08, Research, Estimates), the most actively traded Nasdaq stock, slipped more than 2 percent. The networking company said it struck a deal with phone service provider AT&T (T: up $0.07 to $18.35, Research, Estimates) on product planning and sales.

U.S. Treasury bonds rose despite the gain in equities. The bellwether 10-year note gained 6/32 of a point in price, its yield easing to 3.82 percent. The dollar continued to suffer from the yen's newfound strength but gained a bit of ground against the euro.

Light crude oil futures for April delivery fell 42 cents a barrel to $36.06. Gold for April delivery slipped $4 an ounce to $352.40.

Stocks in Europe closed lower Tuesday. Asian markets suffered from their own concerns about military escalation in the region, also ending mostly down on the day. Tokyo's Nikkei index dropped more than 2 percent.