Stocks are still ‘vulnerable’

NEW YORK (CNNMoney) — U.S. stocks edged higher Tuesday, but the gains were tempered by investor caution over disappointing economic reports and ongoing geopolitical concerns.

The Dow Jones industrial average (INDU) rose 20 points, or 0.2%, led by a 3% jump in shares of Home Depot (HD, Fortune 500). The home improvement retailer said late Monday that it would buy back $1 billion of outstanding shares.

Big tech stocks were the worst performers on the blue chip index, with shares of Hewlett Packard (HPQ, Fortune 500) and Intel (INTC, Fortune 500) down more than 1%.

The S&P 500 (SPX) rose less than 1 point, and the Nasdaq (COMP) added 11 points, or 0.4%. A 7% drop in shares of Apollo Group (APOL) weighed on both indexes, after the operator of the University of Phoenix lowered its outlook. Devry (DV) and Washington Post Co. (WPO, Fortune 500), which own Kaplan, also slid.

U.S. stocks finished slightly lower Monday, snapping a three-day winning streak. But volume has been light so even the sharp move higher should be taken in stride.

The market is going through “a normal digestion period following the recent sharp gains,” said Scott Marcoullier, chief technical market strategist at Wells Fargo Advisors.

Still, Marcoullier said the market remains “vulnerable to developments in Japan and hot spots in the Mid East.”

Late Monday, President Obama rejected criticism of his decision to commit U.S. forces to the U.N.-authorized military mission in Libya, saying there were strategic and moral reasons to act against Moammar Gadhafi.

In Japan, workers at the crippled Fukushima Daiichi nuclear plant struggled to keep reactors cool and prevent radioactive water from leaking into the ocean.

Economy: The S&P Case-Shiller home price index of 20 major cities showed that January home prices fell 3.1% on an annual basis, nearing the housing market’s 2009 lows. Prices fell 1% on a monthly basis.

Consumer confidence slipped in March, according to the Conference Board. Turbulence in the oil markets and concern over the Japanese nuclear crisis put a big dent in sentiment.

Meanwhile, investors are looking to the end of the week, when the government will release its key snapshot of the nation’s job market.

Friday’s monthly hiring and unemployment report from the Labor Department is expected to show the economy added 185,000 jobs in March, while the unemployment rate remained steady at 8.9%, according to economists surveyed by Briefing.com.

Companies: Shares of BP (BP) fell 2.6% in early trading after analysts at Collins Stewart reportedly downgraded the stock on concerns about its joint-venture with Russian oil and gas company Rosneft.

BP was also under pressure following a report that federal prosecutors are considering whether to pursue manslaughter charges against company managers for decisions made before the Deepwater Horizon oil rig exploded and killed 11 workers last year.

World markets: European stocks fell in afternoon trading. Britain’s FTSE 100 edged lower 0.1%, the DAX in Germany sank 0.5% and France’s CAC 40 tumbled 0.2%.

Asian markets ended lower. The Shanghai Composite fell 0.9% and Japan’s Nikkei slid 0.2%, while the Hang Seng in Hong Kong was little changed.

Currencies and commodities: The dollar rose against the euro, the British pound and the Japanese yen.

Oil for May delivery slipped 20 cents to $103.78 a barrel.

Gold futures for April delivery fell $1.90 to $1,418.00 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged lower, with the yield rising to 3.46% from 3.45% late Monday. 

First Published: March 29, 2011: 9:40 AM ET