New York - Stocks advanced modestly Tuesday after Wall Street shrugged off a sharp drop in orders for manufactured goods and took comfort in the first gain in existing home sales in eight months.
The rise in stocks came after investors showed little reaction to comments from Federal Reserve Chairman Ben Bernanke that he remains concerned that inflation or a steeper-than-expected decline in the housing market could harm an already slowing economy.
In the speech, which included Bernanke's most extensive comments on the economy since this summer, he said inflation remains higher than he would like but that it should fall as the economy cools.
The Commerce Department's report that orders for durable goods fell 8.3 percent in October - the largest drop in more than six years - stoked concerns that the economy is slowing at too fast a pace. But a report from the National Association of Realtors showing a slight uptick in home sales lent support to the market although it also revealed that the median selling price fell by the steepest level on record last month.
The market's muted response followed its worst session in more than four months on Monday. John Zielinski, a portfolio manager at Neuberger Berman, contends the market's drop was overblown and that investors could be seeing lower-than-usual liquidity. For many brokerages, Thursday marks the end of their fiscal year and they are therefore trying to lock in gains.
"The moves seem to be a little bit exaggerated based on the data points we're seeing," he said.
The Dow Jones industrial average was up 14.74, or 0.12 percent, at 12,136.45, after falling 158 Monday.
Broader stock indicators also rose. The Standard & Poor's 500 index was up 4.82, or 0.35 percent, at 1,386.72, and the Nasdaq composite index rose 6.69, or 0.28 percent, to 2,412.61.
Light, sweet crude oil rose 67 cents to settle at $60.99 a barrel.
Doug Sandler, chief equity strategist at Wachovia Securities, likens investors' behavior in the final month or so of the year to a nervous driver trying to steer a car while sitting too close to the windshield. Every move, he says, is exaggerated.
"You've got so many portfolio managers that are cognizant of where they stand for the year that if market moves they jump on it regardless of the direction," he said.