Stocks fell Tuesday as investors took in profits and drew comfort from the Federal Open Market Committee minutes, which offered a fairly benign take on the central bank's future interest-rate hikes.

The Dow Jones industrial average (search) fell 19.88, or 0.2 percent, to 10,503.68, while the Standard & Poor's 500 index (search) was up 0.21, or 0.02 percent, at 1,194.07, and the Nasdaq composite index (search) gained 4.97, or 0.2 percent, to 2,061.62.

Wall Street had eagerly anticipated the minutes from the Fed's May 3 meeting, hoping for a clearer picture of the strength of the economy and the prospects for inflation. In the minutes, the Fed noted a risk of inflation as well as an economic slowdown, but said that those pressures remained in check and that interest rates could be increased slowly.

Recent economic data, however, showed a moderation in prices and inflation risk, as well as increased strength in the economy. But since higher interest rates serve to moderate growth as well as stem inflation, the Fed made the right call, said Lincoln Anderson, chief investment officer at LPL Financial Services.

"The Fed got it right, but for the wrong reasons," Anderson said. "But they should be (raising rates) anyway. The economy seems pretty strong right now, and the Fed is moving on rates at what seems to be a good pace. And that's good for the market."

Shares of Dow component General Motors Corp. (GM) were off 2.6 percent after Fitch Ratings (search) became the second major agency to cut the automaker's debt rating to junk status. GM shares dropped 84 cents at $31.75 on the NYSE.

Crude oil futures were on the rise for a second straight session as investors digested mixed signals from OPEC regarding crude production. A barrel of light crude was quoted at $49.27, up 11 cents, on the New York Mercantile Exchange (search).

On Monday, the Nasdaq posted its seventh day of gains — its longest rally in six months. The Dow closed at its highest level since early April.

The Fed's stance on interest rates could be swayed by the booming housing market, especially since mortgage lending has been unaffected by the rising rate environment of the past year. The National Association of Realtors (search) reported a 4.5 percent increase in existing home sales, which rose to an annualized rate 7.18 million homes in April, compared to 6.87 million in March. Analysts had expected a more modest rate of 6.9 million.

Pharmaceutical developer Genentech Inc.(DNA) said that an experimental treatment for common, age-related eye diseases had strong clinical trial results. The drug was shown to help 95 percent of patients. Genetech gained $2.61 to $79.21.

Rival Eyetech Pharmaceuticals Inc. plunged 41.2 percent, or $9.87, to $14.10 as Merrill Lynch & Co. downgraded the company's stock in response to Genentech's announcement. The brokerage said Genentech's drug may have better long-term efficacy than Eyetech's product.

Home products retailer Williams-Sonoma Inc. (WSM) posted a 22 percent rise in quarterly profits, boosted by strong sales and back orders. The company also beat Wall Street profit expectations by 3 cents per share. Williams-Sonoma nonetheless slipped 18 cents to $37.54.

Guidant Corp. (GDT) fell 0.6 percent after the New York Times reported on defects in its line of heart defibrillators. The firm said it had reported the problems to the Food and Drug Administration. Guidant shares slipped 43 cents cents to $73.80 on the NYSE.

Raytheon Co. (RTN) gained 16 cents to $39.21 after it won a $3 billion contract from the
U.S. Navyto develop radar, weapons and electronics systems for a new class of high-tech destroyers.

Utility stocks could be in focus after billionaire investor Warren Buffett (search) agreed to buy U.S. electricity firm PacifiCorp in a $5.1 billion deal, from British utility Scottish Power Scottish Power said it was selling PacifiCorp to MidAmerican Energy, a unit of Buffett's Berkshire Hathaway .

Department store owner Dillard's Inc. (DDS) fell 11 percent to $22.70 on Inet, after it reported a steeper-than-expected 29 percent drop in quarterly profit, hurt by weak demand for women's clothing and furniture.

The Russell 2000 index of smaller companies was down 0.39, or 0.1 percent, at 612.48.

Overseas, Japan's Nikkei stock average fell 0.22 percent. In Europe, Britain's FTSE 100 was down 0.15 percent, France's CAC-40 lost 0.4 percent for the session, and Germany's DAX index dropped 0.23 percent in late trading.

Reuters and the Associated Press contributed to this report.