NEW YORK (MarketWatch) -- U.S. stocks pared an early rise Tuesday as a rally in energy shares lost some steam as crude-oil futures hovered around $49 a barrel, and as investors digested new data that largely confirmed a bleak view of the nation's economy.
The reports included separate data on factory orders and pending home sales for November, as well as the Institute of Supply Management's non-manufacturing index for December.
The equities market "came off its best levels" of the day following what analyst Frederic Ruffy called "another round of uninspiring economic data."
"Yet, while the economic headlines remain grim, stocks are holding higher in quiet trading because a lot of the bad news was already discounted when the stock market crashed in 2008," said Ruffy, options strategist, at WhatsTrading.com.
Up more than 100 points early on, the Dow Jones Industrial Average dipped briefly into the red. At last check, the blue-chip index was up 31.86 points at 8,984.75, with 17 of its 30 components posting early afternoon gains.
Oil futures were off early highs that had crude trading above $50 a barrel. .
The S&P 500 gained 5.89 points to 933.34, and the Nasdaq Composite rose 18.97 points to 1,647.
On the third trading session of 2009, trading remained light, topping 480 million on the New York Stock Exchange, and 297 million shares on the Nasdaq. Advancers overtook declines more than 2 to 1 on both exchanges.
Indicating further softening could be in store for the U.S. housing market, the National Association of Realtors' index of sales contracts on previously-owned homes fell 4% in November from the prior month.
The Commerce Department said shipments from U.S. factories declined a record 5.3% in November, with the tally confirming a slump in factory activity seen in other reports.
The ISM services index showed nonmanufacturing sectors contracted at a slower pace in December. .
Later, at 2 p.m. Eastern, minutes from the Federal Reserve's mid-December policy-setting meeting are slated for release.
An early glimpse of the recession's toll on consumer spending came from the International Council of Shopping Centers and Goldman Sachs, which said chain-store sales fell 0.8% last week from the year-ago period.
On the corporate front, Dow Chemical Co. said it would pursue legal action against Kuwait's Petrochemical Industries Inc. over the unraveling of a joint venture. Shares of Dow Chemical were up 4% at last check. .
In another illustration of the global recession, Switzerland's Logitech International SA withdrew its financial targets for the year, and said it would cut its workforce by 15%. The maker of computer mice also warned of a worsening economic climate ahead. .
In Asia, shares of Japanese and South Korean automakers advanced. .
Pharmaceutical firms led equities higher in Europe. .
U.S. equities on Monday declined, bringing to an end a three-session winning streak, with the Dow shedding 81.8 points to 8,952.89, off nearly 37% from its record close hit on Oct. 9, 2007. The S&P 500 and the Nasdaq Composite both gave up 4 points.
By Kate Gibson