* Pending home sales drop more than expected
* Factory orders increase for third straight month
* Ford shares advance after December sales data
* Dow slips 0.1 pct, S&P up 0.3 pct, Nasdaq up 0.01 pct
* For up-to-the-minute market news, click STXNEWS/US
(Updates Citigroup stock price, adds context on home sales)
By Edward Krudy
NEW YORK, Jan 5 (Reuters) - The S&P 500 and the Nasdaq
rose on Tuesday as better-than-expected factory orders and a
surge in vehicle sales at Ford Motor Co <F.N> provided more
evidence of an economic recovery.
But a big decline in pending home sales, which fell in
November for the first time in nine months, increased concerns
about the housing market. That capped the broad market's gains
and pushed the Dow industrials into the red a day after all
three major U.S. stock indexes rose to their highest levels in
over a year.
For the past month, stocks have advanced as investors bet
on a series of better-than-expected economic indicators. Much
of that optimism appeared to remain intact on Tuesday as S&P
indexes for the financial, materials and energy sectors ended
the day higher.
Tuesday marked a new 15-month closing high for the S&P 500
and a 16-month closing high for the Nasdaq.
"There is nothing in here to suggest that investors are
backing away at all from the sentiment expressed yesterday,
which is one of increased optimism about the global recovery,"
said Craig Peckham, equity trading strategist at Jefferies &
Company in New York.
Peckham pointed to what he termed a "slow and measured
march higher" in expectations for a better reading in Friday's
non-farm payrolls report.
The Dow Jones industrial average <> fell 11.94 points,
or 0.11 percent, to end at 10,572.02. The Standard & Poor's
500 Index <.SPX> rose 3.53 points, or 0.31 percent, to finish
at 1,136.52. The Nasdaq Composite Index <> crept up just
0.29 of a point, or 0.01 percent, to close at 2,308.71.
GET YOUR MOTOR RUNNING
Ford Motor Co <F.N> surged 6.6 percent to $10.96, hitting
a 4-1/2-year closing high following its report that its
December sales shot up 33 percent year-over-year, ending a
tumultuous 12 months when rivals GM and Chrysler collapsed
into bankruptcy. Earlier in the session, Ford's stock climbed
to an intraday high of $11.23.
Earlier Tuesday, the government said U.S. factory orders
rose more than expected in November. The report, which
suggested the manufacturing sector will continue to support a
recovery, was released one day after the Institute for Supply
Management's index of manufacturing activity beat estimates.
Financials, energy, materials and consumer discretionary
stocks gave the biggest boosts to the S&P 500 in a muted rerun
of Monday's rally.
The S&P financial index <.GSPF> led the wider market
higher, rising 1.7 percent, with Citigroup ending up 3.8
percent at $3.53 on the New York Stock Exchange.
HOME SALES SWING BOTH WAYS
Pending home sales from the National Association of
Realtors fell 16 percent in November compared with economists'
expectations for a 2 percent drop.
But stocks of most home builders rose, sending the Dow
Jones home construction index <.DJUSHB> up 1.8 percent. Some
analysts said the home sales numbers may have been skewed due
to confusion caused by the government's home tax credit, which
was set to expire in November, but it was eventually extended
to April.
"I think people are more willing to shake off these
November pending home sales numbers and focus more on that
factory orders number," said Marc Pado, U.S. market strategist
at Cantor Fitzgerald & Co. in San Francisco.
The U.S. dollar edged up 0.15 percent against a basket of
major currencies <.DXY>, curbing gains in the materials and
energy sectors. The S&P materials index <.GSPM> advanced 0.5
percent, while an S&P energy index <.GSPE> rose 0.8 percent.
U.S. oil futures <CLc1> rose 0.32 percent, or 26 cents, to
settle at $81.77 a barrel, the highest closing price since
Oct. 9, 2008. This marked the ninth day of gains for oil
futures prices.
The Dow's top performer was Kraft Foods Inc <KFT.N>, which
gained 4.9 percent to $28.77 after Warren Buffett's Berkshire
Hathaway <BRKa.N> voted "no" on the company's proposal to
issue 370 million shares to help finance its proposed purchase
of British chocolate candy maker Cadbury Plc <CBRY.L>.
[]
Volume was light on the New York Stock Exchange, with 1.19
billion shares changing hands, below last year's estimated
daily average of 2.18 billion. On the Nasdaq, about 2.39
billion shares traded.
Advancing stocks outnumbered declining ones on the NYSE by
a ratio of 3 to 2. On the Nasdaq, the opposite trend
prevailed, with five stocks falling for every four that rose.
(Reporting by Edward Krudy; Editing by Jan Paschal)
