NEW YORK ( TheStreet) -- The Dow managed to recapture the 10,000 level in the last hour of trading after wiping away its steepest losses Tuesday, though stocks still finished near the flat line amid uncertainty about global growth.

After being down around 200 points during a good part of the session, the Dow Jones Industrial Average finished 23 points lower, or 0.2%, to 10,044. But the S&P 500 eked out a fractional gain to close at 1074. The Nasdaq dipped 3 points, or 0.1%, at 2211.

"Equity markets thrive when there's certainty, and clearly we don't have that right now. There's a sense that once we have more clarity, we'll be able to see that we're going to get through this and that we'll be OK," said Mike Schenk, senior economist at the Credit Union National Association. "Now, I'm not saying that European debt issues won't drag on U.S. economic growth. I think it'll have an effect and it'll be a noticeable effect, but it won't be devastating.

"What you're seeing today is really being driven by Europe, but all the U.S. data we're getting is showing that consumers are in a much better place, and even the housing market is in a better place -- and that's what's pulls us out of downturns. I'm not saying the data is being ignored, but the emphasis is in other places," Schenk said, adding, "Once the market gets more clarity, I think the data we've been seeing will help the market stabilize."

Several factors weighed on market sentiment Tuesday, including a warning from European Union Economy Commissioner Olli Rehn that major reforms are needed otherwise EU growth will not top 1.5% and the jobless rate will remain high over the next five years.

North Korea has threatened to use military action in retaliation against South Korea if it continues to trespass into its waters, and a North Korean spokesman said the Communist country is severing all relations with South Korea, Reuters reports. Earlier, Asian markets staggered under a Yonhap news agency story that referenced a local report indicating that North Korea is preparing for war. Tensions between North and South Korea have been running particularly high after the recent sinking of a South Korean warship.

Germany may extend its recently announced short-selling ban to all German companies' stocks, according to a report.

In Spain, four saving banks announced plans to merge amid concerns over solvency in the sector.

Overseas on Tuesday, Hong Kong's Hang Seng lost 3.5%, and Japan's Nikkei fell 3.1%. The FTSE in London lost 2.5%, and the DAX in Frankfurt dropped 2.3%.

The Economy

March's Case-Shiller 20-city home price index slipped 0.5% from February, dashing economists' expectations for 3% growth.

The Federal Housing Finance Agency's housing price index for March rose 0.3% from February's decline of 0.4%.
 Housing Prices

Consumer confidence rose for a third consecutive month to a level not seen in more than two years as the Conference Board said confidence rose to 63.3 in May from 57.7 in April. May's level was better than the reading of 58.3 that economists had been expecting.

During a speech in London, St. Louis Federal Reserve Bank President James Bullard said Europe's sovereign debt problems, in all likelihood, will probably not lead to another worldwide recession that many are fearing, according to a report from The Associated Press.

Comments from Rep. Barney Frank (D., Mass.), who serves as chair of the House Financial Services Committee, may have offered some help to the banking sector. Frank, who will also chair a legislative panel meant to hammer out discrepancies between financial reform measures passed by the House and Senate, voiced disagreement with a provision to cull out the derivatives trading operations from major banks, both Reuters and The Wall Street Journal reported.

While bank stocks struggled as a group for much of the day, the KBW Bank index turned positive late and finished with a 1% gain.

Late Tuesday, the American Petroleum Institute said crude oil inventory levels climbed up by 616,000 barrels for the week ending May 21, according to Bloomberg. Analysts polled by Platts were projecting a 100,000-barrel increase to crude oil stockpiles last week. Traders will get another look at supply figures Wednesday morning when the government's Energy Information Administration releases their own data.

Company News

Home Depot ( HD) and Alcoa ( AA) were two of a handful of Dow components that closed higher, while Kraft Foods ( KFT), Chevron ( CVX), and Coca-Cola ( KO) were the biggest drags.

On the New York Stock Exchange, AAR ( AIR), a products and services provider to aviation and defense industries, was the weakest-performing stock, followed by Navios Maritime Acquisition ( NNA).

AutoZone ( AZO) made gains after beating analysts' estimates with a third-quarter profit of $4.12 a share and sales that rose 9.9%, to $1.82 billion. The stock added $10.32, or 5.6%, to $194.57.

Dynegy ( DYN), USEC ( USU) and AK Steel ( AKS) also made gains, putting in the best performance on the NYSE.

In its continuing efforts to stop the oil leak in the Gulf of Mexico, BP ( BP) is now planning a "top kill" operation under which it will inject heavy drilling fluids into the well to stem the flow of oil and gas.

Yahoo! ( YHOO) acquired Koprol, a Jakarta, Indonesia-based social networking site.

Dell ( DELL) said its Streak, a five-inch Android-based Tablet, will go on sale across the U.K. early next month and in the U.S. later in the summer.

Microsoft ( MSFT) said Entertainment and Devices Division head Robbie Bach will retire in the fall, according to a press release issued today. J Allard, senior vice president of Design and Development in the division, will also be leaving Microsoft, though the company says he will take on an adviser role for CEO Steve Ballmer.

Commodities and the Dollar

Crude oil for July delivery settled at $68.75 a barrel after losing $1.46 during the session.

Elsewhere in commodity markets, the June gold contract gained $4 to settle at $1,198 an ounce.

The dollar was trading higher against a basket of currencies, with the dollar index up by 0.5%.

Treasuries

The U.S. Treasury's $42 billion auction of two-year notes had a high yield of 0.769% and a bid-to-cover ratio of 2.93. Indirect bidders took 36%.

The benchmark 10-year Treasury rose 8/32, lowering the yield to 3.171%.

The two-year note weakened 2/32, lifting the yield to 0.759%. The 30-year bond gained 10/32, diluting the yield to 4.074%.

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

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