Wall St. inches up; S&P 500 climbs above 1,900

NEW YORK (Reuters) - Stocks mostly edged higher on Tuesday, with the S&P 500 briefly rising above 1,900 for the first time and more developments on the deal front helping investors' outlook.

Both the Dow and the S&P 500 hit record intraday highs and then pulled back a bit, holding slim gains in afternoon trading. In contrast, the Russell 2000 <.TOY> index of small-cap stocks was down 0.7 percent.

"Technically new highs are usually a bullish event, but we're not seeing news to really inspire people, so we're holding in here at these new highs," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Homebuilders' shares gained, while the common stock of mortgage finance giants Fannie Mae and Freddie Mac jumped as Federal Housing Finance Agency Director Mel Watt laid out new policies that could make it easier for many Americans to obtain mortgages. Fannie Mae shot up 8.3 percent to $4.59 while Freddie Mac jumped 6.9 percent to $4.49.

Keurig Green Mountain Inc was the S&P 500's biggest percentage gainer, up 9.6 percent at $121.30 after Coca-Cola Co said it will raise its stake in the company, the maker of

the popular Keurig one-cup coffee brewer, to 16 percent from 10 percent.

The Dow Jones industrial average <.DJI> rose 19.91 points or 0.12 percent, to 16,715.38. The S&P 500 <.SPX> gained 1.69 points or 0.09 percent, to 1,898.34, The Nasdaq Composite <.IXIC> dropped 6.36 points or 0.15 percent, to 4,137.503.

The dip in the Russell 2000 follows its biggest daily percentage gain since early March. At its session low on Friday, the index was down exactly 10 percent from the intraday record high set in early March.

O'Rourke said he expects more consolidation in the Russell 2000, given how long it had outperformed the S&P 500.

Among homebuilders, the stock of D.R. Horton Inc rose 2.3 percent to $23.11. The PHLX housing sector index <.HGX> gained 0.7 percent.

In deal news, DirecTV shares fell 0.8 percent to $86.49 a day after sources told Reuters that AT&T Inc was in active talks to buy the company in a deal that could be worth close to $50 billion. AT&T's stock dropped 1.2 percent to $36.15.

Data did little to change the view that the U.S. economy is poised for faster growth this quarter. Retail sales rose 0.1 percent in April, less than expected, though the March reading was revised upward.

(Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)

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