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Market Closes Higher on Mild Relief Rally

Stocks closed a choppy session higher, rallying from a morning dip but closing well off the day's highs as a relief rally offered what likely will be little more than a brief respite from the turmoil ratting the market in June.

After a violent sell-off Monday, the major averages were back in green numbers as energy and consumer discretionary stocks led sector gains on the Standard & Poor's 500.

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Market participants, though, were becoming resigned to a summer of sloppy trading and rangebound levels until both the European and U.S. economy get clearer signs of direction.

"The market seems to vacillate between cynicism and optimism over what European leaders can get done. The totality of our focus continues to be on Europe and their ability to claw their way out of the hole they've dug," said Art Hogan, chief market strategist at Lazard Capital Markets in New York. "While we're waiting for that to happen, we see lackluster volume and relatively sideways action."

Indeed, despite the wild swings of recent days the market essentially is unchanged from where it was in mid-May, or early February for that matter.

That makes even a buy-on-the-dips strategy difficult to pull off.

"It's really hard to justify, unless you're a minute-by-minute investor, to look at this market and say there are great opportunities created by the downdrafts," Hogan said. "Sometimes the sidelines is the best place to be."

The economy brought a mixed bag of news. The Conference Board's reading on consumer confidencedipped for a fourth consecutive month to a low not seen since November.

But some much-welcomed positive housing numbers helped offset the damage.

The closely watched S&P/Case Shiller home price index, though backward-looking, indicated that April saw the third consecutive month of price increases.

"Across the board it looks like a very sold report," David Blitzer, chairman of the S&P Index Committee, told CNBC. "Some of this is probably because this is the spring selling season really hitting its stride, but certainly not all of it."

On the markets, investors favored cyclical stocks and took the day off from defensives such as consumer staples.

Kraft Foods and Hewlett-Packard were the biggest Dow losers, while Disney and Chevron led the bluechips as energy posted a big day.

Investors also took a breather from news about the European debt crisis as the much-anticipated summit looms beginning Thursday. Traders largely brushed off a late-day Egan-Jones downgrade and negative outlook on German debt.

Tuesday's action saw moves coming from a bustle of activity in U.S. companies.

Market volume closed at 3.35 billion shares, while breadth was positive, with gainers beating losers nearly 2 to 1.

News Corp is considering splitting its publishing assets, including the Wall Street Journal, from its entertainment properties, among them its Fox news and entertainment programming.

Investors welcomed the reports, sending shares to a four-year high.

"A spin-off would reduce the holding company discount in the stock and would allow investors to own a higher growth business without the slower growth publishing business and its associated liabilities," Barclays analyst Anthony DiClemente said in a note.

Elsewhere:

In tech, Zynga shares fell hard after the gaming company announced its "Zynga With Friends" network aimed at connecting the millions of users for its online products. The company sees 250 million people a month use its games primarily through Facebook and now seeks to connect them through a "social lobby" that will allow them to see what games their friends are playing and to track high scores.

Investors were underwhelmed by the "Friends" rollout.

Supernus Pharmaceuticals, a small-cap pharma, saw its stock price double on news it has received tentative regulatory approval of its epilepsy drug Trokendi.

Seagate Technology will be the newest addition to the Standard & Poor's 500 index, replacing Progress Energy, as of the market close Friday.

For-profit education firm Apollo Group surged after the company reported earnings after the bell Monday of $1.20 a share, well ahead of expectations at 97 cents.

Rosetta Genomics, a molecular diagnostics firm that announced plans to offer up to $35 million in ordinary shares to fund operations and other purposes, saw its shares surge.

JPMorgan Chase rose after Goldman Sachs added the bank, which has suffered since disclosure of the "London Whale" trading losses, to its conviction buy list.

Microsoft moved higher on the heels of its deal to buy Yammer for $1.2 billion in cash, a move that will help Microsoft gain a foothold in the social networking space. Yammer is a professional networking company.

European shares ended a threee-day losing streak to close mostly flat.

Commodities markets were mixed, with oil flat and metals lower while some grains moved higher.