US stocks rise despite weak home sales data

US stocks posted modest gains on Tuesday, shrugging off a weak report on home sales and renewed concerns that Europe's sovereign debt crisis may disrupt the global economic recovery.

The Dow Jones Industrial Average rose 21.23 points (0.20 percent) to 10,463.64 at 1600 GMT.

The tech-rich Nasdaq index added 15.54 points (0.68 percent) at 2,304.63 and the S&P 500 index, a broader measure of the markets, edged up 1.30 points (0.12 percent) to 1,114.50.

"The US equity markets have battled back," Charles Schwab & Co. analysts said in a note to clients, following "the damage to sentiment that came from an unexpected drop in existing-home sales and from continued euro-area deficit concerns."

Sales of previously owned homes in the United States fell 2.2 percent in May after two consecutive rises, the National Association of Realtors said Tuesday, despite support from a government tax-incentive program.

Under the homebuyer tax-credit program, contracts had to be signed by April 30 and settled by June 30. Existing-home sales are measured at closing, while new-home sales are reported when contracts are signed.

The existing-home sales report "suggests that there may be greater fundamental weakness in housing demand than anticipated," said Celia Chen at Moody's Economy.com.

Eurozone sovereign debt concerns were reignited after Fitch downgraded BNP Paribas, France's largest bank, citing its exposure to risky businesses and assets, and Standard & Poor's warned about loans at six top Spanish banks.

The renewed worries came as the Federal Reserve opened a two-day interest-rate meeting that is expected to leave rates at virtually zero in a bid to support the economy's fragile recovery.

Economically-sensitive companies suffered. Alcoa slipped 0.77 percent to 11.63 dollars and Caterpillar slid 0.68 percent to 65.62 dollars.

Pharmacy chain Walgreen plunged 6.27 percent to 28.25 dollars after reporting disappointing quarterly earnings.

The action followed Monday's abrupt late-session reversal of a strong rally sparked by China's announcement that it would ease its currency limits. The Dow edged down 0.08 percent, the Nasdaq dipped 0.90 percent and the S&P 500 slipped 0.39 percent.

Bond prices rose. The yield on the 10-year US Treasury bond fell to 3.214 percent from 3.243 percent on Monday while that on the 30-year bond dropped to 4.145 percent from 4.164 percent. Bond yields and prices move in opposite directions.