The Dow ended slightly lower, held back by a 3.5 per cent drop in Bank of America Corp after a brokerage advised investors to sell the stock, citing the No. 2 US 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, up 2 per cent, and Freeport-McMoran Copper & Gold, which jumped 4.1 per cent.

Standouts included shares of independent oil and gas producer Devon Energy, up 3.8 per cent, and oil services company Schlumberger Ltd, which jumped 1.7 per cent. 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 Mr 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 slipped 16.04 points, or 0.13 per cent, to close at 12,532.60. But the Standard & Poor's 500 Index inched up 3.11 points, or 0.23 per cent, to finish at 1,352.99. The Nasdaq Composite Index rose 14.30 points, or 0.61 per cent, 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 from JPMorgan Chase & Co.

Shares of Bank of America dropped to US$40.97 ($56.60) on the New York Stock Exchange, where shares of JPMorgan, the No. 3 US bank by assets, slid to US$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 per cent, or 70 cents, at US$35.74, followed by shares of chemical maker DuPont, which gained 1.4 per cent, or 64 cents, to US$47.30.

Shares of Caterpillar, the maker of bulldozers and excavating equipment, which is an exporter that benefits from a declining dollar, rose almost 1 per cent to finish at US$76.64 on the NYSE. Its customers include miners.

Monsanto Co was another bright spot on the commodities front after the U.S. agricultural biotechnology company raised its profit forecasts. Its shares jumped 9.9 per cent to US$114.54 on the NYSE.

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

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

The wireless chipmaker's stock, which gained 2.3 per cent to close at US$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 jumped 4.4 per cent to close at US$28.73 on Nasdaq after Citigroup said it is likely that Microsoft Corp will raise its takeover offer for the Internet media firm. Shares of BlackBerry maker Research In Motion Ltd ended at US$115.95, up 3.7 per cent.

Static for Clear Channel
In after-hours trade, shares of Clear Channel Communications slid 19.4 per cent to US$26.25 on news that talks concerning the US$20 billion leveraged buyout of the US radio and TV station operator had hit a snag. The stock ended the regular session at US$32.56, down 5.6 per cent 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. -- REUTERS