Stock rally runs out of gas

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NEW YORK (CNNMoney) -- U.S. stocks ended a quiet session lower Tuesday as investors found little reason to push the market up given the strength of the recent rally.

The Dow Jones industrial average (INDU) fell 44 points, or 0.3%, to end at 13,198. The S&P 500 (SPX) lost 4 points, or 0.3%, to 1,412. The Nasdaq (COMP) edged down 2 points, or 0.1%, to 3,120.

Bank of America (BAC, Fortune 500) weighed on the Dow after the stock was downgraded by Baird Equity Research. Pfizer (PFE, Fortune 500) led gainers on the index as the Supreme Court took up the 2010 health care reform law.

Stocks rallied Monday, after Federal Reserve chairman Ben Bernanke's comments on the job market gave investors more reason to believe the central bank will keep interest rates low. But the tone was cautious Tuesday as investors digested mixed reports on home prices and consumer confidence.

"The market had a significant run," said Art Hogan, managing director at Lazard Capital Markets. "It's not unusual to see a mixed reaction as investors await the next catalyst."

Overall, stocks have rallied this year on improving economic data and easing concerns about the debt crisis in Europe. In addition, investors say the market has been supported by the Federal Reserve's monetary policies.

So far this year, the Dow has climbed 8%, the S&P 500 has gained nearly 13% and the Nasdaq is up more than 20%.

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The gains have drawn some investors who had been skeptical of the rally off the sidelines, said Carmine Grigoli, chief investment strategist at Mizuho Securities USA.

"We're at the stage now where investors are recognizing that this advance is for real," said Grigoli. "The thing investors are grappling with now is whether to pursue this advance or wait for pull back to add to positions."

Traders said stocks were also being driven by so-called portfolio rebalancing, when institutional investors buy winners and sell losers ahead of quarterly statements to clients.

The trend boosted some of the quarter's best performing stocks, including Apple (AAPL, Fortune 500), Sears Holdings (SHLD, Fortune 500) and Micron Technology (MU, Fortune 500).

Economy: Home prices in 20 major cities fell to the lowest level since 2002, according to S&P/Case-Shiller.

The index for January dropped 3.8% year-over-year, after a 4.1% drop in the month prior.

The Conference Board's Consumer Confidence Index for March eased to 70.2 from 71.6 in February.

In a lecture about the Fed's emergency efforts during the financial crisis, Bernanke said the bailouts of Bear Stearns and AIG were "distasteful" but still necessary.

Meanwhile, the Fed was "helpless" when it came to saving Lehman Brothers, Bernanke told students at George Washington University.

Companies: Lennar (LEN) posted earnings of 8 cents per share on revenue of $725 million, figures that topped analysts' estimates. The homebuilder said it has seen an uptick in sales and new orders in the first quarter.

Shares of major homebuilders were among the best performers in early trading. Pulte (PHM, Fortune 500), DR Horton (DHI, Fortune 500) and KB Home (KBH) were all higher.

Healthcare companies were under pressure after Supreme Court justices offered sharply divided views on the controversial individual mandate provision at the heart of the 2010 federal health care reform law. Tenet Healthcare (THC, Fortune 500), HCA Holdings (HCA, Fortune 500), United Health Services (UHS, Fortune 500) were all lower.

Drug-store chain Walgreen (WAG, Fortune 500) reported earnings of 78 cents a share on $18.7 billion in revenue, slightly better than analyst estimates.

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Shares of private education provider Apollo Group (APOL, Fortune 500) dropped despite reporting earnings late Monday that beat Wall Street estimates.

Morgan Stanley's (MS, Fortune 500) former CEO John Mack is joining the private equity firm Kohlberg Kravis Roberts as a senior advisor, the firm announced Tuesday.

World markets: European stocks closed mostly lower. Britain's FTSE 100 (UKX) eased 0.5%, the DAX (DAX) in Germany ended flat and France's CAC 40 (CAC40) fell 0.9%.

Asian markets ended mixed. The Shanghai Composite (SHCOMP) shed 0.2%, the Hang Seng (HSI) in Hong Kong gained 1.8% and Japan's Nikkei (N225) jumped 2.4%.

Currencies and commodities: The dollar strengthened against the euro, the British pound and the Japanese yen.

Oil for May delivery rose 30 cents to settle at $107.33 per barrel a barrel.

Gold futures for April delivery fell 7 cents to end at $1,684.90 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury increased, pushing the yield down to 2.19% from 2.25% late Monday.