Having sprinted higher for three weeks, the stock market is taking a break.
Investors made few big moves Tuesday after the Standard & Poor's 500 index rocketed 14% in just 16 days. The market closed with modest gains as traders held their positions and looked toward the Labor Department's employment report Friday.
The Dow Jones industrial average rose nearly 34 points. On Monday, the blue chips jumped 115 points and the S&P; 500 nosed above 1,000 for the first time in nine months.
Tuesday's mostly upbeat news helped prevent the market's pause from turning into the type of slide that can follow big jumps. Analysts have been predicting stocks would idle after such a strong run, and some saw investor caution at work.
"There is a lot of concern that the market has moved too far too fast and that we've gotten ahead of the economy," said Brian Bush, director of equity research at Stephens Inc.
But the Commerce Department's report Tuesday of an increase in consumer spending and the National Assn. of Realtors' report of a rise in pending home sales provided evidence that the economy could be stabilizing.
And Caterpillar predicted that cost cuts and other efforts would enable it to turn a profit in coming years even if the economy is slow to recover. Traders follow the world's largest maker of construction and mining equipment for signals about the overall economy.
The Dow rose 33.63 points Tuesday, or 0.4%, to 9,320.19. The S&P; 500 increased 3.02 points, or 0.3%, to 1,005.65, and the Nasdaq composite index climbed 2.70 points, or 0.1%, to 2,011.31. The gains left stocks at new highs for the year.
Stocks jumped more than 1% on Monday on upbeat reports on manufacturing, housing and banking.
The advance adds to the Dow's July gain of 8.6% that injected a stalled spring rally with new energy. The Dow is still down 34% from its peak in October 2007.
Traders are likely to grow more anxious as they await the Labor Department's report for July. The nation's unemployment rate stands at a 26-year high of 9.5% and is expected to eventually top 10%. Investors are looking for the pace of layoffs to slow so the economy can heal.
Bond prices fell, pushing the yield on the benchmark 10-year Treasury note up to 3.67% from 3.63% late Monday.
The dollar was mixed, while gold prices rose.
Oil prices shed 16 cents to $71.42 a barrel on the New York Mercantile Exchange.
Three stocks rose for every two that fell on the New York Stock Exchange. Consolidated volume rose to 5.8 billion shares from 5.7 billion Monday.
The Russell 2000 index of smaller companies rose 4.96, or 0.9%, to 570.74.
Overseas, Britain's FTSE 100 and Germany's DAX index lost 0.2% and France's CAC-40 slipped less than 0.1%. Japan's Nikkei stock average rose 0.2%.