The Dow closed down about 0.1%, while the broader Standard & Poor's 500 index added 0.2%. The Nasdaq composite index rose 0.6%.
Stocks struggled to pick a direction in early trading after Monday's big run up.
Tuesday's economic news, which included worst-than-expected reports on home prices and consumer confidence, also added to investor fears. So they retreated to the sidelines or took modest profits. The US treasuries market saw falls in yields for various durations as investors parked profits in cash.
Oil edged higher to just over $US101 a barrel, copper rose, all agricultural commodity prices jumped in the US and gold ended up $US16 at $US935 an ounce.
The S&P/Case-Shiller index showed home prices in 20 key US markets dropped 10.7% in January, the biggest drop on record. Another report showed that consumer confidence slumped to 64.5 in March, from 75 in the previous month, a five-year low.
Goldman Sachs analysts reported that Wall Street banks, brokerages and hedge funds may report $US460 billion in credit losses from the collapse of the subprime mortgage market, or almost double the amount already disclosed.
Other analysts said US bank profits will continue to wane as Bank of America was downgraded to a sell and Merrill Lynch's earnings were slashed 45% by JP Morgan.
Goldman Sach's share-price estimate was cut 3.7% to $US210 by analysts at Fox-Pitt Kelton Cochran Caronia Waller. The firm also cut profit estimates for the world's biggest securities firm for the rest of this year and all of 2009.
Lehman Bros, the fourth-largest American investment bank, had its share-price forecast cut 16% to $US70 at Fox-Pit and its 2008 and 2009 profit estimates were also cut.
Goldman reckons its estimate of $US460 billion in credit losses it foresees may "result in a substantial tightening in credit conditions" as banks and other lenders cut lending to preserve lower capital and reserves and to maintain capital adequacy ratios.
European stocks rallied rose strongly following Wall Street's Monday surge. Led by major banks across the region, most markets closed with solid gains. The region-wide Dow Jones Stoxx 600 Index rose 3.2%.
National markets gained in all of the 17 western European bourses that were open. The U.K.'s FTSE 100 climbed 3.6% for its best day's trading in two months. France's CAC 40 rose by a similar amount and Germany's DAX increased 3.2%.
In Asia it was a similar story as markets had their best day for five weeks.
The MSCI Asia Pacific Index rose 3.1%, its third day of gains. Japan's Nikkei rose 2.1%; the ASX 200 Index surged 3.7% here in Australia and Hong Kong's Hang Seng Index added 6.4%.
Markets rose other countries open for trading across Asia, except for Taiwan, which failed to continue Monday's 4% gain inspired by Ma Ying-jeou's presidential election victory.
The MSCI's Asian Index has risen 4.3% in the past three days, led by financial shares; on speculation the US will contain the credit crunch mess. The rise has trimmed its 2008 loss to 11%.
In Australia the market closed saw a 3.72% gain for the ASX 200 and a 3.27% gain for the All ordinaries Index.
The big miners were stronger, with BHP Billiton adding 54 cents to $34.41 and Rio Tinto putting on 71 cents to $117.00. The BHP offer of 3.4 shares for every Rio share was priced at $116.99 at BHP's closing price yesterday.
Banks were stronger, with ANZ adding $1.35 to $24.33, the Commonwealth Bank $3.15 to $42.45, the NAB $1.49 to $30.60 and Westpac 70 cents to $24.80. Macquarie Group jumped 11.7% to $55.30, on course for its highest close since late last month.
The CBA said it expected to make a pre-tax gain of about $355 million from the sale of half its shareholding in Visa, which listed on the New York Stock Exchange last week.
Australia's fifth-largest bank, St George, added $1.70 to $27.80 after it said it stood to make a pre-tax profit of about $75 million on the shares it received in the Visa float.
Sigma Pharmaceuticals added 4.5 cents to $1.27 after the drug maker and distributor forecast profit growth of as much as 12% in its 2008/09 year, as its restructure gathered pace.
Retailers were stronger, with Woolworths adding $1.27 to $29.27, David Jones gaining 16 cents to $3.54 ahead of its interim result today and Harvey Norman adding 19 cents to $3.82.
Wesfarmers, the owner of Australia's second largest retailer, Coles, gained $1.04 to $37.99, shaking off claims it could be forced to sell assets to repay debt from the Coles takeover.
Media were also stronger, with Consolidated Media Holdings adding 11 cents to $3.64, Fairfax 13 cents to $3.60, News Corp gaining 80 cents to $21.40 and its non-voting shares putting on 76 cents to $21.16.
The energy sector was mixed, with Oil Search adding 9 cents to $4.52 but Woodside declined 91 cents to $50.35. Santos gained 7 cents to $13.10 after chief executive John Ellice-Flint resigned from his post, effective immediately, with the oil and gas producer deciding to seek a replacement for company's next phase of growth.
Gold miners were weaker with the gold price down as well. Newcrest dropped 50 cents to $30.80, Newmont 23 cents to $4.95 but Lihir was steady at $3.60.
