U.S. Stocks Struggle To Retain Gains After Two Days Of Losses

NEW YORK (MarketWatch) -- U.S. stocks stepped back from their first advance in three days on Tuesday after the European Central Bank announced it would lend $500 billion to commercial banks and investors digested solid results from Goldman Sachs Group Inc. and Best Buy Co., the largest U.S. electronics retailer.

The market's "initial boost from good corporate news is beginning to fade, the best case scenario is we hold onto some slim gains for most of the day as we approach options expirations this Friday," said Peter Cardillo, chief market economist at Avalon Partners.

Up more than 80 points earlier on, the Dow Jones Industrial Average was more recently off 3.7 points at 13,165.1, with 16 of its 30 components trading lower.

"The housing market is still very much in negative territory," said Cardillo, referring to early data. The government reported new single-family home construction slowed to its weakest pace in 16 years in November, with starts down 5.4% to a seasonally adjusted annual rate of 829,000. .

"For the second month in a row, the volatile multi-family starts category was strong, while single-family groundbreaking activity sagged," said Stephen Stanley, chief economist at RBS Greenwich Capital.

In a related development, the Federal Reserve is proposing rules aimed at heading off another lending crisis like the one that hit the subprime-mortgage industry. .

The S&P 500 shed 0.8 points to 1,445.53, while the Nasdaq Composite fell 2 points to 2,572.46.

Equities also got an early boost from the ECB's move Tuesday to make available more than $500 billion to boost liquidity in the banking system. .

On the New York Mercantile Exchange, crude-oil futures were up 8 cents at $90.7 a barrel. .

In the metal pits, gold rallied, climbing 0.6% to $804.4 an ounce.

Volume on the New York Stock Exchange came to 479 million shares, and advancing stocks topped those falling 8 to 7. On the Nasdaq, 700 million shares were exchanged, and declining shares edged just ahead of those advancing.

Goldman Sachs reported fourth-quarter net income rose 2% from a year ago, with profit topping Wall Street estimates for an eighth straight quarter. Its stock, however, fell 3.9%.

Shares of Best Buy also fell, recently down 2.8%, after the company said third-quarter profit climbed to 53 cents a share from 31 cents a year earlier, exceeding forecasts.

Adobe Systems Inc. shares were up 3.6% after the software maker late Monday reported strong fourth-quarter profit and sales that mostly topped analysts' estimates. .

Overseas Action

In Europe, shares recovered a bit as investors moved back into banks as central banks moved to alleviate turmoil in the credit market. .

Asian stocks took a mostly upbeat course, with markets in Hong Kong and South Korea gaining and Japan's Nikkei 225 Average narrowing losses. .

On Monday, stock indexes fell to their lowest levels in more than two weeks on concern about U.S. economic growth.

By Kate Gibson