Updated from 9:44 a.m. EST

Stocks on Wall Street continued with modest gains midmorning Tuesday as more dim housing data sifted in on day two of a holiday-shortened trading week.

The

Dow Jones Industrial Average

was off its morning high, up 36 points at 8555, and the

S&P 500

gained 5 points at 876. The

Nasdaq

was recently rising 12 points at 1543.

Stocks in New York closed lower Monday, as what little news there was tended to be less than encouraging.

Tuesday brought a cast of economic data. Real

gross domestic product

fell at an annual rate of 0.5% in the third quarter, the federal government said Tuesday, following a 2.8% increase in the second quarter.

The decline in GDP, a measure of the output of goods and services produced by labor and property located in the U.S., reflected negative contributions from personal consumption expenditures, residential fixed investment and equipment and software.

Some of the most watched figures, existing-home sales and new-homes sales for November were released Tuesday midmorning. New-home sales fell to 407,000 from 433,000, while expectations were for 415,000. Existing-home sales also fell more than expected, declining to 4.49 million from 4.98 million, compared to the 4.93 million consensus.

In other data Tuesday, the University of Michigan consumer sentiment index rose to 60.1 from 59.1, compared to a predicted fall to 58.8.

Later in the week, mortgage application data, the

Washington Post

and

ABC News

consumer comfort index, personal income data and initial jobless claims, retail sales and durable goods data will be released.

In a sign of the times, commercial lender

CIT Group

(CIT) - Get Report

said Tuesday that the federal government will officially invest $2.33 billion in a preferred equity stake, now that it's received approval from the

Federal Reserve

to become a

bank holding company

.

By receiving bank-holding status, financial institutions such as

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley

(MS) - Get Report

have gained access to the Fed's discount window and other government programs, including Troubled Assets Relief Program, or TARP.

Last week, Treasury Secretary Henry Paulson argued that Congress should now release the

second half of the $700 billion TARP fund

, which was set up in October to bail out struggling financial institutions.

Elsewhere, on Tuesday, Standard & Poor's and Moody's lowered credit ratings for automakers late Monday. Moody's downgraded the Corporate Family rating of

Ford

(F) - Get Report

to Caa3 from Caa1, and lowered the senior unsecured rating of

Ford Motor Credit

, the captive finance arm of Ford Motor, to Caa1 from B3. Meanwhile, S&P lowered the corporate credit rating on

Chrysler

to CC from CCC+.

The downgrades come a week after President Bush said the U.S. government would extend

$13.4 billion in loans to automakers

GM and Chrysler in December and January through the Troubled Asset Relief Program, with another $4 billion available in February.

Domestic automakers receiving government aid have been charged with the task of showing financial viability by the end of March. They're not the only ones struggling, however. On Monday,

Toyota

said it expects to post its first annual operating loss and will barely break even for the year through March, due to the economic downturn and slowing sales in the U.S.

Longer-dated U.S. Treasury securities were recently mixed. The 10-year was up 1/32 to yield 2.2%, and the 30-year was down 22/32, yielding 2.6%. The dollar was weaker against the euro, and stronger against the pound and yen.

In commodities, oil was recently falling 38 cents to $39.53 a barrel, after rising above $40 earlier in the morning. Gold was falling $3.60 to $843.60 an ounce of late.

Overseas, European exchanges such as the FTSE in London and the DAX in Frankfurt were edging up almost 1% apiece. In Asia, Japan's Nikkei was closed for the day, while Hong Kong's Hang Seng ended with losses.

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP contributed to this report.