Stocks Make Halting Advance

Meanwhile, the Nasdaq remains down 0.6% for the week, 7% for the year, and it's only a stone's throw away from the psychologically significant 2000 level. The last time it reached that mark was at the beginning of November, before the re-election of President Bush.

With 1.6 billion shares on the Big Board and more than 2 billion in Nasdaq trading, volume was above average but upside volume was only 50% of the total on the New York Stock Exchange and 70% on the Nasdaq; investors were not exactly breaking down the doors to buy stocks.

Instead, Wall Street appeared to be content, for now, that stocks have returned to appropriate levels after a violent swing up in the last two months of 2004 that accounted for virtually all of that year's gains.

"We clearly got way ahead of ourselves in December," said Barry Ritholtz, chief market strategist with Maxim Group and a contributor to RealMoney.com. "There was obviously a lot of January profit-taking, no real inflows and there's no institutional appetite for risk."

Ritholtz noted that while the S&P 500 is headed for year-over-year earnings growth of around 16% for the fourth quarter, growth is closer to 10% if energy stocks are removed from the equation.

"The reason why that is significant is that as oil and gas prices go up, that sucks the air out of the rest of the room," he said. "While 10% growth is respectable, it's not very good when you look at it in the context of earnings momentum from quarter to quarter."

Oil prices were climbing back toward the $50-a-barrel mark, up 83 cents on the day to $49.64, as traders anticipated the release of U.S. inventory data Wednesday morning. The upcoming election in Iraq and the likelihood of violence in that region also may be causing oil market jitters.

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