Stocks rose on Tuesday as an upbeat report on sales of previously owned U.S. homes bolstered hopes for an economic recovery.
But a sell-off in financials, sparked by worries about the dilutive impact of recent stock offerings, kept the market's gains in check.
Investors snapped up shares of home builders, with Toll Brothers
Shares of big manufacturers also rose, with plane maker Boeing Co
A drop in the U.S. dollar against major foreign currencies also buoyed the shares of multinational companies. The dollar hit fresh lows against the euro on Tuesday as strong housing data weakened its safe-haven appeal.
Pending sales of previously owned U.S. homes shot up 6.7 percent in April, the biggest monthly gain in 7-1/2 years, according to the National Association of Realtors.
Some news is starting to come out that says things are stabilizing and slowly starting to look better, said Dan Faretta, senior market strategist at Lind-Waldock, a retail brokerage firm, in Chicago. We've still got companies going under, filing for bankruptcy, and unemployment is continuing to rise ... but we are starting to finally hit the bottom.
The Dow Jones industrial average <.DJI> gained 50.64 points, or 0.58 percent, to 8,772.08. The Standard & Poor's 500 Index <.SPX> gained 5.37 points, or 0.57 percent, to 948.24. The Nasdaq Composite Index <.IXIC> gained 13.66 points, or 0.75 percent, to 1,842.34.
Trading was volatile, with indexes swinging between gains and losses earlier in the session.
The broader market came up against critical resistance a day after the S&P 500 hit a key technical milestone, finishing above its 200-day moving average for the first time since December 2007. Since hitting a 12-year low on March 9, the S&P 500 has risen about 40 percent.
Boeing shares rose 3.4 percent to $49.34, while Exxon Mobil climbed 1.6 percent to $72.88, and McDonald's gained 1.3 percent to $60.65.
On Nasdaq, shares of Oracle Corp
Several U.S. banks are raising capital to show they are capable of functioning without government support, in a move to free themselves from tight regulations after they received billions of dollars from the Treasury Department's Troubled Asset Relief Program, or TARP. [ID:nN02502975]
Shares of JPMorgan
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)