updated 2/21/2007 8:03:10 AM ET 2007-02-21T13:03:10

Wall Street closed Tuesday’s uneven session higher, as a drop in oil prices and encouraging comments from a Federal Reserve official allowed investors to shrug off disappointment over Home Depot Inc.’s declining sales. The Dow Jones industrial average closed at another record high.

Major Market Indices

Home Depot, the world’s largest home improvement retailer, said sales at its stores open more than a year dropped in the fourth quarter , indicating that consumers’ appetite for home improvement goods is still dwindling due to the sluggish housing market.

The company’s results, along with news that Wal-Mart Stores Inc. had lower-than-expected revenue , sent the market down in early trading. But comments from outgoing Fed Governor Susan Bies, who said the country may be seeing a bottom in slumping demand for housing, alleviated some concerns that the downturn will drag down the rest of the economy. Her remarks echoed those of Fed Chairman Ben Bernanke last week, who predicted that the economy will keep growing at a modest pace.

A drop in oil prices, which tumbled on the New York Mercantile Exchange Tuesday on forecasts of warmer weather, also lent some support to stocks.

Analysts said that while the market had a hard time finding motivation Tuesday, it still had an upward bias.

“The overall trend of the market is basically positive,” said Brian Gendreau, investment strategist for ING Investment Management, pointing to Bernanke’s forecast of moderating growth and cooling inflation. “That’s a great environment for equities. Unless you have some specifically nasty news, there’s no reason why the trend shouldn’t be upward.”

The Dow Jones industrial average finished the day up 19 points, or 0.2 percent, rising to a new record high. The index closed at a new record high and has added more than 200 points over the past four trading sessions.

The broader Standard & Poor’s 500-stock index closed with a gain of 4 points, or 0.3 percent, while the Nasdaq composite index added 17 points, or 0.7 percent.

Markets were closed Monday for Presidents Day.

Bond prices rose slightly, with the yield on the benchmark 10-year Treasury note at 4.68 percent, down from 4.69 late Friday. Bies’ comments helped support Treasurys, which in turn added some fuel to the stock market’s advance.

The dollar rose against other major currencies, while gold prices fell.

The decline in crude prices gave some investors reason to buy back into the market, as lower fuel costs curb consumer prices — which could help boost discretionary spending, and reduce the chance of an interest rate hike.

Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh, noted that a drop in energy prices often pushes up stocks, but that the connection between the two markets has grown tenuous. A decrease in energy prices typically pushes down oil company stocks.

On Tuesday, ConocoPhillips fell 63 cents to $65.52; Chevron Corp. fell 63 cents to $70.18; and Exxon Mobil Corp. fell 46 cents to $74.83.

The two retail earnings reports that showed weaker-than-anticipated sales also kept some pressure on stocks.

“We’re always fascinated with the consumer, so we’re taking their temperature constantly,” Caughey said.

Home Depot fell 18 cents to $41.26 after reporting same-store sales that disappointed analysts. Wal-Mart rose $1.54, or 3 percent, to $50.82 after issuing its financial results, which showed better-than-expected fourth-quarter profit growth and an upbeat forecast for 2007. The company had fourth-quarter sales of $98.09 billion, though — below the $99.95 billion forecast.

Investors will be poring over earnings report for computer and printer maker Hewlett Packard Co., which will be released after the market closes, for clues to how Americans are spending their money.

Excitement over the merger between XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. gave some stocks a pop, especially in the technology sector. But the effect on the overall market was somewhat muted as investors looked more closely at the proposed deal — trying to gauge whether XM shareholder’s stock is getting a high enough premium, and whether the deal will actually happen, given the regulatory obstacles the companies must overcome .

XM Satellite rose $1.71, or 12 percent, to $15.69, and Sirius Satellite rose 27 cents, or 7 percent, to $3.97.

In addition to the merger between XM Satellite and Sirius, British pharmaceutical company Shire PLC is buying U.S. drug maker New River Pharmaceuticals Inc. for about $2.6 billion ; Vulcan Materials Co. is acquiring construction aggregate maker Florida Rock Industries Inc. for $4.6 billion; and EMI Group PLC said it was approached by Warner Music Group about a potential takeover.

Florida Rock Industries soared $19.54, or 42 percent, to $66.50.

New River surged $4.86, or 8 percent, to $63.21.

Warner Music climbed 96 cents, or 5 percent, to $19.21.

Not all takeover talk was positive for stocks, though. General Motors Corp. slipped 32 cents as rumors continued to circulate that the struggling automaker is interested in buying rival Chrysler Group.

Overseas, Japan’s Nikkei stock average fell 0.01 percent. Britain’s FTSE 100 fell 0.50 percent, Germany’s DAX index fell 0.06 percent and France’s CAC-40 fell 0.46 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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