* U.S. consumer confidence hits highest since October 2007
* Best Buy tumbles after results, DSW rises
* Dow up 0.3 pct; S&P 500 up 0.2 pct; Nasdaq up 0.3 pct (Updates to early afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Aug 26 (Reuters) - U.S. stocks advanced modestlyon Tuesday as both the Dow and S&P 500 backed off after hittingfresh intraday records on the heels of strong consumer data,which suggested that the market's long-running rally could keepgoing.
Energy shares, which closely track the pace of growth, ledthe day's gain. The S&P energy index rose 0.8 percent.
The S&P 500 popped back above 2,000, which it had breachedfor the first time on Monday. With Tuesday's move, both the Dowand the S&P 500 have risen in 10 of the past 13 sessions, whilethe Nasdaq is up for 11 of the past 13 sessions.
However, much of the market's recent gains have come on lowvolume, suggesting that many traders may be reluctant to jump inat current levels.
"From an activity standpoint, it's relatively quiet. Webroke through 2,000 so psychologically now it's going to teasewith that a little bit," said Ken Polcari, director of the NYSEfloor division at O'Neil Securities in New York.
U.S. consumer confidence rose more than expected in August,climbing to its highest since October 2007, according to theConference Board, an industry group. The Commerce Departmentreported that U.S. durable goods orders jumped 22.6 percent inJuly, the biggest gain on record, though the number was skewedby strong international demand for aircraft.
"For the most part the data is starting to come in moreconsistently, at least to the positive side, we are not gettingas many hiccups. Although it's slow, it is not necessarily asfast as people would like but maybe that is a good thing becausethere will be more control over it." Polcari said.
The market's trend higher is still seen as intact and theS&P 500's price-to-earnings ratio is within historical norms,leading many analysts to believe stocks are not overvalued.Nonetheless, pronounced further gains may be a challenge amidpotential headwinds such as a reduction in Federal Reservestimulus and a simmering conflict between Ukraine and Russia.
The Dow Jones industrial average rose 52.63 points or0.31 percent, to 17,129.50. The S&P 500 gained 4.26points or 0.21 percent, to 2,002.18. The Nasdaq Composite added 14.57 points or 0.32 percent, to 4,571.92.
Best Buy Co Inc slid 6.4 percent to $29.95 after theelectronics retailer reported second-quarter revenue that missedexpectations and forecast a drop in same-store sales in thesecond half of the year. But DSW Inc jumped 8.5 percentto $30.79 after the shoe and accessory retailer's adjustedquarterly earnings topped forecasts.
Digital Ally Inc extended its meteoric rise,climbing another 8.8 percent to $13.61 on heavy volume. Therecent fatal police shooting of an unarmed black teenager inMissouri has fueled interest in the company's wearable camera,and the stock's price has nearly quadrupled this month alone.
Amazon.com Inc agreed late Monday to buylive-streaming gaming network Twitch Interactive for about $970million in cash. Amazon's stock rose 2.7 percent to $342.98 andgave the biggest boost to the Nasdaq 100 index. (Reporting by Chuck Mikolajczak; Editing by Jan Paschal)
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