NEW YORK U.S. stocks on Tuesday veered mostly up, with energy shares fronting the market's limited gains and helping investors bypass thinking the Federal Reserve would hike interest rates to curb inflation.
A summary of the Fed's closed-door meeting on Aug. 5 illustrated renewed concern among Fed officials about the mix of weak growth and elevated energy prices.
"They are very concerned about inflation, yet at the same time they speak very negatively about pressures on the economy. My own belief is it could be some time before they raise interest rates, unless gas prices spike dramatically," said Doug Roberts, chief investment strategist at Channel Capital Research.com.
"The FOMC minutes reveled that most members anticipate the next move to be an increase in rates, but are uncertain about the timing and extend of tightening," said Lehman Brothers analyst Michelle Meyer.
After traveling between positive and negative turf, the Dow Jones Industrial Average finished 26.62 points higher, at 11,412.87.
Of the blue-chip index's 30 components, 18 finished ahead, with American International Group Inc. fronting gains for a second straight day.
"I think that yesterday's sell-off was overdone on light volume. It was across the board, indiscriminate selling. That opened the door to selective buying today. The dollar is stronger, and I like that indication that money is betting on the US relative to other investments abroad. This is bringing funds here. It is very cautious and gradual, but the right direction," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
The S&P 500 added 4.67 points to 1,271.51, while the Nasdaq Composite fell 3.62 points to 2,361.97.
Energy shares led the advance among the S&P's 10 industry groups, with financial companies also ahead after wavering from earlier support after the Federal Deposit Insurance Corporation said its "problem list" in the second quarter grew to 117 financial institutions from 90 at the end of the first quarter.
Information technology, consumer staples and consumer discretionary were all fractionally lower, as well as telecommunication services.
As is typical for the final month of the summer, trading volume was light, topping 856 million on the New York Stock Exchange, where advancing stocks outran those declining about 9 to 5. On the Nasdaq, 591 million shares were exchanged, while advancers topped decliners 5 to 4.
"We've got a lot of people on vacation," said Pado.
And, one veteran market expert said the few traders at work were likely more interested in presumed presidential nominee Barack Obama's stance on the capital gains tax than on the usual market fare.
"There is going to be more attention paid to what is happening at the Democratic National Convention than the economic data calendar. This is the only week of the year when politics can take over economic data, geopolitical concerns and commodity prices," said Art Hogan, chief market strategist at Jefferies & Co.
Ahead of the opening bell, Standard & Poor's reported the Case-Shiller index of 20 major metropolitan areas last month fell 15.9 percent from June 2007.
Separately, the Conference Board reported U.S. consumer confidence rose in August for a second month straight of gains, but the level remained relatively low amid persistent job concerns.
"Consumer confidence rose to 56.9 in August versus 51.9 in July probably because of the drop in oil prices. Pay close attention to Hurricane Gustav because this could end up being a powerful storm that could derail the current drop in crude oil," said Morgan Keegan analyst Kevin Giddis.
On Tuesday, the hurricane was deemed enough of a threat to supplies that crude futures closed higher, with the contract for October delivery finishing up $1.16 at $116.27 a barrel on the New York Mercantile Exchange.
"Although consumers have received some relief from lower energy prices, they are still struggling with rising unemployment, tighter credit and declining home prices. This has kept consumer confidence in recession territory," wrote Lehman Brothers analyst Michelle Meyer in a late morning note.
Later data included a report from the Commerce Department that showed a 2.4 percent rise in the sale of new U.S. homes last month, but also included downward revisions for prior months that in the end painted a far weaker pace for July than analysts were looking for.
The Office of Federal Housing Enterprise Oversight said U.S. home prices fell a seasonally adjusted 1.4 percent in the second quarter, with the numbers based on repeat sales of homes mortgaged through Fannie Mae and Freddie Mac.
Overseas, stocks in Europe swung higher as technology companies rose, with then pan-European Dow Jones Stoxx 600 index ending 0.2 percent higher.
In Asia, the equities markets retreated, with the Nikkei 225 Average closing 0.8 percent lower.
On Monday, U.S. stocks dropped as credit-crunch fears were back at the forefront.
As of Monday's close, the blue-chip index was on track for a monthly gain, up 0.7 percent in August, with the U.S. consumer services index climbing the most, posting a 3.73 percent gain, according to preliminary figures released Tuesday by Dow Jones Indexes.
The initial look at the still-to-be completed month had the U.S. consumer services index climbing the most, posting a 3.73 percent gain, while the Dow Jones U.S. Basic Materials Index lost the most, falling 6.09 percent in August, Dow Jones Indexes said.