S&P 500, Nasdaq inch up

NEW YORK (Reuters) - The S&P 500 and Nasdaq rose on Tuesday as rebounding metal and oil prices lifted mining and energy shares, offsetting news of the biggest drop in consumer confidence in five years.

The Dow ended slightly lower, held back by a 3.5 percent drop in Bank of America Corp (BAC.N) after a brokerage advised investors to sell the stock, citing the No. 2 U.S. bank's exposure to the bursting housing bubble.

Stocks weakened early after a Conference Board report showed consumer confidence fell sharply in March, raising the specter of Americans tightening their purse strings.

The data also hurt the dollar, which in turn fueled a rebound in commodity prices after last week's sell-off. That benefited companies such as aluminum producer Alcoa Inc (AA.N), up 2 percent, and Freeport-McMoran Copper & Gold Inc (FCX.N) which jumped 4.1 percent.

Standouts included shares of independent oil and gas producer Devon Energy (DVN.N), up 3.8 percent, and oil services company Schlumberger Ltd (SLB.N), which jumped 1.7 percent. Both stocks were among the Dow's biggest gainers.

"The catalyst for commodities is the weaker dollar and it's allowing other groups to rally," said Steve Goldman,

market strategist at Weeden & Co., based in Greenwich, Connecticut. "Global growth, at least from a commodities standpoint, will probably stay intact."

The Dow Jones industrial average .DJI slipped 16.04 points, or 0.13 percent, to close at 12,532.60. But the Standard & Poor's 500 Index .SPX inched up 3.11 points, or 0.23 percent, to 1,352.99. The Nasdaq Composite Index .IXIC rose 14.30 points, or 0.61 percent, to close at 2,341.05.

As the market had rallied on Monday to book its strongest 2-day advance in nearly four months, some investors opted to take profits, particularly in the financials, which had rallied on news of a revised buyout offer for beleaguered Wall Street investment bank Bear Stearns Cos BSC.N from JPMorgan Chase & Co (JPM.N).

Shares of Bank of America dropped to $40.97 on the New York Stock Exchange, where shares of JPMorgan, the No. 3 U.S. bank by assets, slid to $46.06. Both stocks were among the top drags on the Dow and the S&P 500.

ALCOA AND QUALCOMM CLIMB

But shares of Alcoa led the Dow's advancers, finishing up 2 percent, or 70 cents, at $35.74, followed by shares of chemical maker DuPont (DD.N) , which gained 1.4 percent, or 64 cents, to $47.30.

Shares of Caterpillar Inc (CAT.N), the maker of bulldozers and excavating equipment, which is an exporter that benefits from a declining dollar, rose almost 1 percent to finish at $76.64 on the NYSE. Its customers include miners.

Monsanto Co (MON.N) was another bright spot on the commodities front after the U.S. agricultural biotechnology company raised its profit forecasts. Its shares jumped 9.9 percent to $114.54 on the NYSE.

"Outside of financial companies, earnings remain pretty strong," said Cleveland Rueckert, market analyst with Birinyi Associates Inc in Stamford, Connecticut.

Investors also snapped up technology shares following positive broker comments on the sector's bellwether stocks, including Qualcomm Inc (QCOM.O).

The wireless chipmaker's stock, which gained 2.3 percent to close at $40.80 on the Nasdaq, was raised to a "buy" from "neutral" at Merrill Lynch, according to theflyonthewall.com, a financial Web site.

Shares of Yahoo Inc (YHOO.O) jumped 4.4 percent to close at $28.73 on Nasdaq after Citigroup said it is likely that Microsoft Corp (MSFT.O) will raise its takeover offer for the Internet media firm. Shares of BlackBerry maker Research In Motion Ltd (RIMM.O) ended at $115.95, up 3.7 percent.

STATIC FOR CLEAR CHANNEL

In after-hours trade, shares of Clear Channel Communications Inc (CCU.N) slid 19.4 percent to $26.25 on news that talks concerning the $20 billion leveraged buyout of the U.S. radio and TV station operator had hit a snag. The stock ended the regular session at $32.56, down 5.6 percent on the NYSE.

Trading was extremely light on the New York Stock Exchange, with about 1.48 billion shares changing hands, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.12 billion shares traded, slightly below last year's daily average of 2.17 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of 2 to 1 on both the NYSE and the Nasdaq.

(Reporting by Ellis Mnyandu; Editing by Jan Paschal)