U.S. stocks edged lower after the Dow briefly broke above a key level for a second day and shares of Best Buy dropped on worries about its margins.
Best Buy (BBY.N), one of the S&P 500's best performers this year, reported a quarterly profit, reversing a year-ago loss, boosted by cost controls. But there was also concern about pressure on margins during the holiday season and the stock fell 8.7 percent to $39.76.
A recovery in the U.S. housing market helped Home Depot (HD.N) top profit and sales estimates for the third quarter, prompting the No. 1 home improvement chain to raise its fiscal-year outlook for the third time this year. Its stock earlier hit a lifetime high of $82.25. Home Depot was up 1.1 percent at $80.50, supporting the Dow and the S&P 500.
The market is seen trading in a tight range as investors wait for further clues from the Federal Reserve on how soon it may begin reducing its stimulus. Fed Chairman Ben Bernanke speaks on "Communication and Monetary Policy" at 7 p.m.
The major indexes continue to face resistance at key levels, with the Dow breaking above 16,000 briefly and the S&P 500 hovering near 1,800, which it briefly crossed on Monday. Both indexes were unable to hold those levels at Monday's close.
"Certainly they are psychological levels, and it might have (significance) for investors who have missed this rally," said Bruce Zaro, chief technical strategist, Delta Global Asset Management in Boston.
On the Dow, "we were fairly quick to get from 15,000 to 16,000: 195 days. Typically it bumps its head up and comes back, and I would expect to stay above these levels during the balance of 2013," he said.
The Fed's stimulus and ultra-low interest-rate policy have helped the S&P 500 gain more than 25 percent so far in 2013, which would make it the best year for the index in a decade.
The Dow Jones industrial average .DJI was down 16.92 points, or 0.11 percent, at 15,959.10. The Standard & Poor's 500 Index .SPX was down 4.69 points, or 0.26 percent, at 1,786.84. The Nasdaq Composite Index .IXIC was down 18.63 points, or 0.47 percent, at 3,930.43.
"I'd say there's a very low probability the Fed does anything between now and the end of the year," said Dan Veru, chief investment officer of Palisade Capital Management, which has $4.5 billion in assets and is based in Fort Lee, New Jersey. That's likely to mean the market may be able to hold its gains through the end of the year, he said.
On Wednesday, minutes from the Fed's October meeting are scheduled to be released. At that meeting, the Fed decided to stick with its bond-buying program. Investors have been bracing for a pullback from the stimulus program since the summer.
At Monday's close, Best Buy was up 268 percent so far this year.Consumer discretionary companies as a group have outperformed the broader market.
Trina Solar Ltd (TSL.N) were down 3.7 percent at $15.60, reversing an earlier gain. It posted a profit after eight quarters of losses as solar panel prices held steady after a four-year decline and the company cut manufacturing costs.
Tesla Motors (TSLA.O) shares were up 1.7 percent at $123.70 in a volatile session. U.S. traffic safety regulators launched an investigation into the luxury electric sports car maker's Model S sedan after three car fires in six weeks.