Stocks trade mixed after consumer report

MATTHEW CRAFT AP Business Writer Published:

NEW YORK (AP) -- Major stock indexes flipped between small gains and losses in afternoon trading Tuesday.

The Dow Jones industrial average edged down 13 points to 13,228 a half hour before the closing bell. Bank of America fell 2.6 percent, the biggest drop in the Dow.

Lennar Corp. pulled housing stocks up after reporting earnings that beat analysts' expectations. Lennar delivered more houses and pulled in more orders, and its stock rose 4.6 percent, the best gain in the S&P 500 index. PulteGroup rose 3.6 percent, D.R. Horton 2.8 percent.

Major indexes opened higher, then pulled back after 10 a.m., when the Conference Board said its index of consumer confidence slipped in March as higher gas prices appeared to offset the surging stock market. Around the same time, the Federal Reserve Bank of Richmond reported that a measure of regional manufacturing plunged this month.

Other indexes wavered near the end of Tuesday trading. The S&P 500 index dropped one point to 1,415. The Nasdaq composite index rose four points to 3,127.

All three indexes are up more than 1 percent for the week. The Nasdaq has already gained 20 percent and the S&P 500 index 12.7 percent to start the year. That three-month surge easily beats the 8 percent return most fund managers hope to make in a whole year.

Brian Gendreau, market strategist at Cetera Financial, said the stock market still has room to go higher even after such a strong start. Companies in the S&P 500 index are trading for around 13 times their expected earnings over the next year, below the average of 14.6 times over the past decade. And there's plenty of cash still tucked away in the Treasury market.

"Compared to bonds, stocks remain very attractive," Gendreau said. "That doesn't tell you if we'll get a move in a week or a month from now, but it does tell you that there's a lot of pent-up demand."

The economic reports on consumer confidence and regional manufacturing helped push up prices in the U.S. government debt market, where traders park funds when the economy looks sluggish. The 10-year Treasury note rose 53 cents for every $100 invested. The yield fell to 2.19 percent from 2.26 percent late Monday.

Demand for Treasurys has pulled yields down from highs reached last week. The yield on the 10-year note briefly hit 2.4 percent last Tuesday, the highest level so far in 2012.

Natural gas prices fell again Tuesday on rising supplies and warmer winter weather. Natural gas futures fell 1.8 cents to $2.208 per 1,000 cubic feet. That's near a 10-year low and half of what natural gas was fetching back in July.

Any money that consumers are saving on natural gas could wind up in the gasoline tank. The national average for regular gasoline in the U.S. is $3.90 per gallon. It's risen 62 cents since Jan. 1.

Among stocks making big moves:

-- Walgreen Co. rose 1.2 percent. The drugstore chain posted a drop in quarterly earnings but the results still topped analysts' expectations.

-- Apollo Group Inc. fell 8.6 percent, the biggest drop in the S&P 500. The for-profit education company reported a profit in the most recent quarter but issued a dim forecast. Apollo expects fewer students to enroll in the coming quarter.

-- Ista Pharmaceuticals Inc. leapt 7.8 percent on news that Bausch & Lomb plans to buy the drug maker for roughly $500 million in cash. Ista gets most of its revenue from Bromday, an eye drop for patients recovering from cataract surgery. Bausch & Lomb plans to pay $9.10 per share for Ista, a 72-cent premium over Monday's closing price. Bausch & Lomb is privately held.