Housing shares led a rebound by US stocks on Tuesday after upbeat data on home prices, but the outlook was clouded by doubts about a summit on the European debt crisis this week.
Major US stock indexes recovered part of Monday's losses of more than 1%. However, an air of caution remained as Spanish borrowing costs jumped and US consumer confidence fell to its lowest in five months in June.
"Certainly in the United States stocks are nicely priced, and for a long-term investor it is an attractive entry point, but then what about this macro risks hovering around the market? I think it's having a dampening effect," said John De Clue, regional investment director at US Bank Wealth Management in Minneapolis.
Spanish bond yields rose after demand at a bill sale fell despite significantly higher yields as hopes faded that the European Union summit later this week would produce game-changing crisis measures. Madrid formally asked on Monday for funds to bail out its banks in a move some see as a prelude for a full-blown bailout of the euro zone's fourth-largest economy.
The Dow Jones industrial average rose 62.10 points, or 0.50%, to 12,564.76. The S&P 500 Index gained 8.84 points, or 0.67% to 1,322.56. The Nasdaq Composite added 20.68 points, or 0.73%, to 2,856.84.
The PHLX housing index jumped 3.1% after S&P/Case Shiller data showed home prices in 20 metropolitan areas gained 0.7% on a seasonally adjusted basis, topping economists' expectations for a 0.4% gain.
Energy shares led gains on the S&P 500, boosted by a jump of more than 2% jump in Brent crude prices. A strike by Norwegian oil workers threatened to tighten North Sea crude supply.
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