NEW YORK - Wall Street finished an extremely erratic session with a modest decline Tuesday as investors parsed unimpressive data on home sales and consumer confidence and awaited the Federal Reserve's meeting on interest rates.
The Dow Jones industrial average initially slipped, soared nearly 100 points, and ultimately pulled back again - much as it did Monday, when the blue chip index rose by triple digits only to give up the gains and finish lower.
A slight decline in May new home sales provided investors with some relief, but the report wasn't much to cheer about. The Commerce Department said sales of new homes fell 1.6 percent in May to a seasonally adjusted annual rate of 915,000 units. It was the fourth decline in the past five months - in April, new home sales had jumped 12.5 percent.
Investors were also jittery about a larger-than-expected drop in the Conference Board's consumer confidence index, ongoing subprime lending troubles, and what the Fed might say when it decides on interest rates Thursday. Wall Street anticipates central bankers will keep the benchmark rate steady at 5.25 percent, but it will be watching for any change in their stance on inflation that could suggest a rate cut or rate hike later in the year.
"There's a lot to keep people busy," said Scott Fullman, director of investment strategy for I. A. Englander & Co. "All of these issues are really coming into play, as we're seeing with the volatility in the market. It's going to go on for a little while longer until the market has a reason to settle down."
The stock market at times drew support from a drop in oil prices and some new takeover activity Tuesday, but they weren't enough to maintain a rally.
According to preliminary calculations, the Dow fell 14.39, or 0.11 percent, to 13,337.66.
Broader stock indicators also fell after sacrificing large gains. The Standard & Poor's 500 index slipped 4.85, or 0.32 percent, to 1,492.89, and the Nasdaq composite index fell 2.92, or 0.11 percent, to 2,574.16.
The Dow and the S&P reached record closes earlier in June, but have been lurching up and down in recent weeks after a surge in Treasury yields raised concerns about the Fed's rate policy.
Bonds fell after the home sales data. The yield on the benchmark 10-year Treasury note rose to 5.09 percent from 5.08 percent late Monday.
The dollar was mixed against other major currencies. Gold prices fell.
Overall, the housing market looked dim Tuesday: the Standard & Poor's home price index for April fell for the 17th consecutive month and showed its steepest year-over-year decline since 1991. Also, homebuilder Lennar Corp. posted a loss for the second quarter and warned that a third-quarter loss is likely.
Lennar fell $1.20, or 3.1 percent, to $37.55, and other homebuilders followed.
Some new deal-making news initially gave stocks a lift.
Basell, a division of billionaire investor Leonard Blavatnik's Access Industries, said it will buy rival chemical company Huntsman Corp. in a cash deal worth $5.6 billion. Huntsman soared $5.31, or 28.1 percent, to $24.21.
Investment management company BlackRock Inc. said it is buying the fund of funds division of Quellos Group LLC in a deal worth up to $1.7 billion. BlackRock rose $1.77 to $156.30.
Roche Holding AG made a $3 billion hostile bid for the medical testing products maker Ventana Medical Systems Inc., which surged $24.69, or 47.72 percent, to $76.42.
Late Monday, Spanish power company Iberdrola SA said it plans to buy utility owner Energy East Corp. for $4.5 billion in cash. Energy East surged $3.71, or 16.5 percent, to $26.25.
But the buyout news could not calm Wall Street's skittishness ahead of the Fed meeting.
"The glass is half-empty right now. We've got to wait for the sentiment to change," said John Forelli, portfolio manager for Independence Investment LLC in Boston. "People aren't worried about growth, people aren't worried about earnings - they're worried about inflation."
Meanwhile, subprime lending woes have re-emerged as a major market concern, after Bear Stearns Cos. said last week it had to bail out a collapsing hedge fund heavily invested in bonds backed by subprime loans. On Tuesday, Securities and Exchange Commission Chairman Christopher Cox said the SEC has opened about a dozen investigations related to complex products in which debt is bundled together.
Subprime worries should be a boon for the safe-haven Treasury bond market, but so far, they haven't been. Treasurys have remained weak, leading many investors to bail out of stocks because high rates can slow down business.
"They're worried about the safest asset class out there, U.S. government bonds, and the riskiest asset class out there, subprime loans. It shows the indecision out there among investors right now," Forelli said.
Crude oil futures for August dropped $1.41 to $67.77 a barrel on the New York Mercantile Exchange ahead of the government's weekly inventory report Wednesday.
Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange, where volume came to 1.73 billion shares, down from 1.74 billion Monday.
The Russell 2000 index of smaller companies fell 1.33, or 0.16 percent, to 826.13.
Overseas, Japan's Nikkei stock average fell 0.12 percent. Britain's FTSE 100 declined 0.44 percent, Germany's DAX index dropped 0.88 percent, and France's CAC-40 lost 0.82 percent.