* Homebuilders rise after data shows continued price gains
* Washington's budget squabbles expected to spark volatility
* Applied Materials shares rise on merger with Tokyo
* Facebook leads Nasdaq on report it could be allowed in
* Indexes up: Dow 0.17 pct, S&P 0.24 pct; Nasdaq up 0.51 pct
By Chuck Mikolajczak
NEW YORK, Sept 24 U.S. stocks edged higher after
three straight declines on Tuesday after housing data pointed to
a slowly improving economy, while investors grew more cautious
over the possible impact of budget negotiations in Washington.
The S&P 500 index had dropped for three straight sessions,
its longest losing streak in a month and only the fifth time
this year the index has suffered such an extended decline.
"We are seeing that once again where, after some weakness,
the buyers do kind of dip their toes in," said Ryan Detrick,
senior technical strategist at Schaeffer's Investment Research
in Cincinnati, Ohio.
Tea Party-backed U.S. senators threatening to stall a bill
to fund the U.S. government ran into a wall of resistance late
Monday from top Senate Republicans, including Minority Leader
However, the refusal by the Senate Republican leaders to go
along did not remove the chance of a government shutdown. Signs
still pointed to a frantic last-minute showdown that will
determine whether the U.S. government stays open next week.
Republicans want to cancel funding for "Obamacare," President
Barack Obama's healthcare law.
While many on Wall Street expected an eventual government
shutdown to be short and not affect markets deeply, volatility
"You know anytime the government gets involved, it is going
to be the eleventh hour before they decide anything, so that is
going to potentially cause some volatility and anxiousness,"
U.S. home prices rose 0.6 percent in July on a seasonally
adjusted basis, the S&P/Case Shiller composite index of 20
metropolitan areas showed. That was a slightly slower pace than
forecast but a separate report from the U.S. Federal Housing
Finance Agency showed U.S. home prices rose 1 percent.
Lennar shares gained 5.5 percent to $36.43 after the
No. 3 U.S. homebuilder reported a better-than-expected quarterly
profit. The earnings, coupled with the economic data, helped the
PHLX housing sector index climb 2.9 percent.
In other economic news, a dip in consumer confidence
reflected the potential impact higher interest rates and a
sluggish economy could have on the housing market.
The data failed to remove investor uncertainty about another
concern: the Fed's intentions about scaling back its stimulus
efforts. The Fed cited the budget and debt ceiling negotiations
in Washington as a reason to keep its current stimulus intact.
The Dow Jones industrial average rose 26.52 points or
0.17 percent, to 15,427.9, the S&P 500 gained 4.02 points
or 0.24 percent, to 1,705.86 and the Nasdaq Composite
added 19.093 points or 0.51 percent, to 3,784.381.
Facebook shares led the Nasdaq higher, up 3.7 percent
to $48.99 after the South China Morning Post reported the online
social media giant and other websites deemed sensitive and
blocked by the Chinese government will be accessible in a
planned free-trade zone in Shanghai. In addition, Citigroup
upgraded the stock to a "buy" rating.
Shares of Applied Materials jumped 7.6 percent to
$17.20 after the chipmaker and Tokyo Electron Ltd said
they will merge in an all-stock deal, creating a $29 billion
Red Hat shares slumped 10.7 percent to $47.26 as the
worst performer on the S&P 500 after the world's largest
commercial distributor of the Linux operating system reported
late on Monday a slower growth in billings than analysts had