Stocks closed the session higher after investors spent the day sifting through various economic reports and comments by Federal Reserve Chairman Ben Bernanke, who provided a mixed economic outlook.
Investors appeared to conclude that Bernanke -- who said core inflation remains "uncomfortably high," but that the economy overall "is likely to expand at a moderate pace" -- won't cut rates anytime soon.
The Dow Jones Industrial Average , the Nasdaq , and the S&P 500 all closed slightly higher.
Treasury prices closed higher, pushing yields lower.
U.S. crude oil futures ended higher for the second day in a row, lifted by forecasts for a colder weekend and as traders positioned ahead of inventory data due Wednesday morning.
The Fed chairman's comments come on the heels of a mixed bag of economic data that moved the markets back and forth all day.
The Commerce Department's report that orders for durable goods fell 8.3% in October - the largest drop in more than six years - earlier stoked concerns that the economy is slowing at too fast a pace.
Meanwhile, consumer confidence dropped in November after analysts had predicted the index would rise. But a report from the National Association of Realtors showing a slight uptick in home sales lent support to the market although it also revealed that the median selling price fell by the steepest level on record last month.
Bernanke noted that the slowdown in the overall economy mostly reflects the housing slump.
The Fed Chairman predicted moderate growth with higher productivity, but he also warned of upside risks of inflation.
Looking ahead to Wednesday, the Fed's Beige Book -- a summary of economic conditions in each of the Fed's 12 regions over the past six months -- will be released at 2 p.m. New York time. Earlier in the day, preliminary third-quarter gross domestic product numbers will be released, as will sales of new homes. Crude oil, distillate, and gasoline stockpile figures will also be posted.
Stocks dropped at the open on the much weaker-than-expected durable goods data. Orders for big-ticket manufactured goods plunged 8.3% in October, the largest amount in more than six years. Economists had expected a decline of only 4.2%.
The indexes had reversed earlier lows after existing home sales rose for the first time since February. Analysts had expected a decline.
Indeed, the housing numbers gave analysts hope: "Home sales were stronger than expected and last month there was positive revision," Tom Sowanick, Chief Investment Officer at Clearbrook Financial told Reuters. "We could have seen the low in home sales."
Europe closed lower for the fifth day in a row and Asia finished lower, with Hong Kong's Hang Seng the worst performer.
Nokia closed lower, after cutting its forecast for operating margin for the next two years. The world's largest maker of mobile phones also predicted slower growth in the global phone market in 2007.
Boeing locked up another order over competitor Airbus, with Air Berlin ordering 60 737-800 jets to be delivered through 2014. Adding in 25 737 jets previously ordered, the deal is worth about $5.7 billion at list prices. Shares closed slightly higher.
Shares of Palm closed down, after the company cut its fiscal second-quarter forecast, citing the delay in the U.S. rollout of a one of the newest versions of the Treo line of handheld smartphones.
Billionaire investor Carl Icahn has acquired a 4% stake in Reckson Associates Realty , according to a Monday filing with the U.S. Securities and Exchange Commission. Shares closed on a positive note. The filing came as the Icahn group seeks to buy Reckson for $4.6 billion, about $600 million higher than a competing bid from SL Green Realty. Reckson's independent directors are giving the Icahn group until Wednesday to provide further details on their bid for the real estate investment trust.
Shares of Ford Motor closed unchanged. The company said it will tap the capital markets for $18 billion in debt to help the struggling automaker execute a multiyear restructuring plan. Ford will pledge its assets as collateral, underscoring the depth of the hole it must escape as falling U.S. market share and high labor costs hit its operations.
New York light crude futures were up amid speculation over further OPEC output cuts and forecasts for colder weather in the Northeast region of the United States.
Euro Indexes Down
Major European indexes closed down over concerns about weakness in the dollar and profits at banking group Barclays and Nokia.
Shares of Barclays fell after the company said fiscal-year results would meet market consensus estimates. Although investment banking was strong, analysts noted that bad debts at its credit-card operation were worse than expected, according to Dow Jones.
Asia Sells Off
Asian investors headed straight for the exit on fears about a potentially softer U.S. holiday shopping season. The Hang Seng led the decliners as investors dumped shares of exporters, but analysts said the index could recover if the Hong Kong government's land auction on Tuesday afternoon was successful. The Nikkei also suffered big blows as the strengthening yen hit automakers and technology shares.