NEW YORK — Wall Street paused after a huge two-session rally Tuesday but closed mostly higher, holding on to almost all its gains even after disappointing reports on consumer sentiment and the housing market.

Stocks pulled past profit-taking that was due in part to the Conference Board's report that consumer confidence sank to a five-year low in March. The index has been weakening since July, and is closely watched to determine the future of consumer spending, perhaps the most critical part of the economy.

Meanwhile, the Standard & Poor's/Case-Shiller home price index indicated that U.S. home prices fell 11.4 percent in January, the steepest drop since data was first collected in 1987. The latest decline means prices have been growing more slowly or dropping for 19 consecutive months.

Volume was light, with many investors holding off any big moves while the market sought a direction; trading remained uneasy amid the ongoing uncertainty about the economy and credit markets. Still, the fact that stocks didn't suffer a huge pullback, which has been the market's pattern for months after a big gain, indicated that at least for the time being Wall Street seems more capable of handling bad news.

Stocks had charged higher in the days following the Federal Reserve's decision to aid investment banks and orchestrate a buyout deal for a near-collapsed Bear Stearns Cos. The Dow Jones industrials shot up nearly 450 points in the previous two sessions.

"There is a lot of cash on the sidelines right now, and they're really waiting to see if there's another shoe to drop," said Todd Leone, managing director of equity trading at Cowen & Co. "Bear Stearns has taken a lot of fear out of the market, and the Fed is doing what it can for the credit crunch, but I think there's still uncertainty."

The Dow fell 16.04, or 0.13 percent, to 12,532.60.

The blue chip index was actually the laggard in Tuesday's session — the broader Standard & Poor's 500 and Nasdaq composite indexes had more robust gains. The S&P rose 3.11, or 0.23 percent, to 1,352.99; the Nasdaq added 14.30, or 0.61 percent, to 2,341.05.

Advancing issues led decliners by 2 to 1 on the New York Stock Exchange, where consolidated volume came to 3.99 billion shares from 4.37 billion on Monday.

Bond prices rose, regaining ground after a huge decline on Monday that accompanied the rally on Wall Street. The yield on the benchmark 10-year Treasury note fell to 3.49 percent from late Monday's 3.55 percent. The yield moved to 3.51 percent in after-hours trading.

The dollar was down against other major currencies, while gold prices rose.

Oil futures wobbled, with some investors selling on new worries about the economy and buying in response to the dollar's latest decline. Light, sweet crude rose 36 cents to settle at $101.22 a barrel on the New York Mercantile Exchange.

Though many on Wall Street expected the latest batch of economic data to be negative — and that might have helped investors shake off the bad news — there continues to be lingering concerns about consumer spending. The mood on Main Street is critical because consumer spending makes up about 70 percent of economic activity.

The Conference Board said its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February. The reading — a five-year low — was far below the 73.0 expected by analysts surveyed by Thomson/IFR.

"What is troubling is that consumer confidence took a plunge, and I think we're going to see consumer spending weaken as we go forward," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners.

Meanwhile, Standard & Poor's/Case-Shiller index showed U.S. home prices declined 11.4 percent in January from a year earlier.

In corporate news, Monsanto Co. shares jumped almost 10 percent after the agricultural products company said earnings per share for the second quarter and for all of fiscal 2008 will be stronger than originally projected. Shares rose $10.29, or 9.9 percent, to $114.54, and also helped boost others in the sector.

JPMorgan Chase & Co. shares fell 49 cents to $46.06 after a securities analyst said the bank will end up paying about $65 per share for Bear Stearns. That amount, which includes costs to bring the two companies together, was labeled too high a price for a "deeply troubled company," the Punk, Ziegel & Co. analyst said.

Bear Stearns fell 31 cents, or 2.8 percent, to $10.94 — above the $10 per share buyout price being offered by JPMorgan. There has been some speculation in the market that a higher offer might come before the deal closes.

Yahoo Inc. rose $1.21, or 4.4 percent, to $28.73 on speculation Microsoft Inc. will raise its takeover price for the Internet company beyond $31 per share. Microsoft fell 3 cents to $29.14.

The Russell 2000 index of smaller companies rose 3.99, or 0.57 percent, to 705.27.

Investors overseas remained upbeat following the U.S. rallies Monday and last week. Japan's Nikkei stock average finished up 2.12 percent. Britain's FTSE 100 fell 0.91 percent, Germany's DAX index rose 3.24 percent, and France's CAC-40 rose 3.49 percent.