) -- Stock gains evaporated by Tuesday's closing bell as investors continued to worry about the political climate and just before



said it swung to a profit.


Dow Jones Industrial Average

fell by 3 points, or up 0.03%, at 10,194. The

S&P 500

dropped 5 points, or 0.4%, at 1092, while the


lost 7 points, or 0.3%, at 2204.

Stocks maintained positive gains throughout much of the day, but declined late. One analyst attributed the late-afternoon slide to lingering uncertainty.

>>Top Growth Stocks Rated Highly

"I think there's a little overhang from last week," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research. "It really seems like we're still fearful of last week's China news, Obama's bank news, Bernanke's confirmation, and people are probably looking ahead to the State of the Union. There's a lot to digest right now."

After the closing bell, Yahoo! said it earned an adjusted 15 cents per share during the fourth quarter, landing ahead of expectations. Net revenue hit $1.26 billion, just ahead of forecasts but down from the $1.38 billion posted in the year-ago quarter. Shares were bid higher to $15.99 in the afternoon and rose another 1.7% in extended-hours trading.

U.S. stocks turned positive in the morning, though later pulled back some after the Conference Board said consumer confidence improved in January, rising to 55.9 from December's upwardly revised level of 53.6. Economists had expected the consumer confidence index to show milder growth with a January reading of 53.5.

Separate reports on home prices painted a hazy picture. The S&P/Case-Shiller 20-city home price index showed a 0.2% dip in November, following an upwardly revised drop of 0.1% in October. Year over year, prices were off by a higher-than-expected 5.3%.

Home prices, as measured by the Federal Housing Finance Agency Home Price Index, meanwhile, rose 0.7% in November, exceeding the slight 0.1% increase that economists had been anticipating.

Shares of homebuilders were trading broadly higher with

Comstock Homebuilding

(CHCI) - Get Report

up 1.2% and

Hovnanian Enterprises

(HOV) - Get Report

up 1.1%.

Beazer Homes USA

(BZH) - Get Report

finished flat at $4.08.

UBS economist Maury Harris attributed some of the rise in home prices to fewer distressed home sales. Harris pointed to a recent report from the National Association of Realtors showing that the percentage of distressed sales fell to 32% of overall sales in December, compared with 49% of total sales in March 2009.

Regarding the S&P/Case Shiller report, Harris noted data represent three-month moving averages, meaning that the November reading reflects contract closings from September, October and November.

"We expect some sporadic weakening in prices in coming months partly because the original Nov. 20 expiration of the homebuyer tax credit pulled forward some demand. However, the extension and expansion of the homebuyer tax credit to April 30 will probably boost demand in the spring and likely lift prices -- a development reflected only with a lag, though, in the S&P/Case Shiller data," he said.

Earlier, reports that


is restricting bank lending pulled Asian markets lower and rattled global investors.

Overseas, Hong Kong's Hang Seng was down 2.4%, and Japan's Nikkei was lower by 1.8%. The FTSE in London was higher by 0.3% and the DAX in Frankfurt was ahead by 0.7%.

The U.S. budget deficit will reach $1.35 trillion in 2010, according to an estimate from the Congressional Budget Office. The figure was released on the same day that reports suggested President Obama will propose a three-year spending freeze to lower the deficit when he gives his State of the Union address on Wednesday night.

The government sold $44 billion in two-year notes in the afternoon. The auction resulted in a high yield of 0.880%. The bid-to-cover ratio came to 3.13 after hitting the 2.91 mark in December. Indirect bidders, or that group that includes foreign central bank purchasers, bought 43%.

The two-year Treasury note was falling 1/32 soon after the auction, pushing the yield higher to 0.824%. The benchmark 10-year Treasury note strengthened 2/32, lowering the yield to 3.623% and the U.S. dollar rose against a basket of currencies, with the dollar index up by 0.4%.


(TRV) - Get Report

was the Dow's best performer after reporting a 60% surge in fourth-quarter earnings and an improved investment portfolio. Shares added 2.7% to $50.23.


(C) - Get Report


Bank of America

(BAC) - Get Report



(F) - Get Report

were the most heavily traded shares on the

New York Stock Exchange

, which was showing listed volume of over 4.7 billion.


(VZ) - Get Report

stock was one of the Dow's worst performers despite meeting analysts' profit estimates. The communications services provider fell short of sales expectations. The stock dropped by 1.7% at $30.17.

Global recovery concerns weighed on the basic materials sector, which was also getting hit by bleak news from

U.S. Steel

(X) - Get Report

. The company not only missed expectations but also warned that it would post a winder-than-expected loss in the first period of 2010. Shares of U.S. Steel slumped 11.8% to $49.61.

In other earnings news,

Johnson & Johnson

surpassed Wall Street's profit expectations by a nickel and also beat sales projections.


(DD) - Get Report

swung to a fourth-quarter adjusted profit of 44 cents, beating Wall Street estimates for earnings of 41 cents a share.

Baker Hughes


said profits sank 81% in the fourth-quarter and sales fell 24%.

Late Monday,


(AAPL) - Get Report

easily beat analysts' projections with a first-quarter profit of $3.67 a share. Sales rose 32% and came in at a better-than-expected $15.68 billion. Shares rose 1.4%, to $205.94.

Steel Dynamics

(STLD) - Get Report

and semiconductor company


(STM) - Get Report

also report earnings late Tuesday. Analysts are projecting profits of 17 cents and 2 cents a share, respectively.

Members of the

Federal Open Market Committee

gather for a two-day meeting ahead of its Wednesday afternoon decision on

interest rates.

Crude oil for March delivery traded 55 cents lower to settle at $74.71 a barrel.

Late Tuesday, the American Petroleum Institute said oil inventory levels fell by 2.2 million barrels last week, according to MarketWatch. Analysts polled by Platts were anticipating a build up of 2 million barrels. The API also said gasoline stocks rose by 916,000 barrels, while distillates dropped by nearly 2 million barrels. Forecasts called for a 1.7 million barrel increase in gasoline, and a 1.8 million barrel draw down in distillates.

The industry figures serve as a prelude to Wednesday morning's inventory report from the Energy Information Administration.

The most actively traded February

gold contract went higher by $2.60 to settle at $1,098.30 an ounce.

-- Written by Melinda Peer and Sung Moss in New York