Stocks zigzag in narrow range as investors sift through mixed signals on the economy

Stocks mixed after retail sales, earnings reports

NEW YORK — Stocks traded in a narrow range Tuesday as investors weighed mixed signals on the economy.

A report on August retail sales beat expectations, but earnings from Best Buy Co. and Kroger Co. disappointed investors.

The Commerce Department said retail sales jumped in August by the largest amount in more than three years. The 2.7 percent increase topped the 2 percent increase predicted by economists polled by Thomson Reuters. Consumers are considered a key to any economic recovery as their spending accounts for about 70 percent of U.S. economic activity.

Excluding auto sales, which were boosted by the government’s popular Cash for Clunkers program, retail sales rose 1.1 percent, topping the 0.4 percent increase expected.

Meanwhile, electronics retailer Best Buy reported worse-than-expected fiscal second-quarter results as sales fell at established stores. However, the company raised its profit and sales forecast for the year, saying customer traffic is stabilizing. Grocery store chain Kroger Co. also reported earnings that fell short of analysts expectations and cut its earnings outlook.

Separately, the Labor Department said inflation at the wholesale level increased 1.7 percent in August, more than double the 0.8 percent jump economists had forecast — a sign inflation fears might becoming to fruition.

Another government report showed business inventories fell 1 percent in July for the 11th straight month. The decline in inventories has put a drag on production at factories as manufacturers slow their work to match a slowdown in demand from businesses. Business sales rose 0.1 percent.

The U.S. market has risen sharply throughout the spring and summer on hopes of a recovery. Now investors are looking for evidence of actual growth, having slowed the market’s surge as they hunt for signs of improvement.

“You want to say that the market is a little bit tired after the run we’ve had yet we continue to grind higher,” said Ryan Larson, senior equity trader at Voyageur Asset Management.

In midday trading, the Dow Jones industrial average rose 9.90, or 0.1 percent, to 9,636.70. The Standard & Poor’s 500 index edged up 0.21, or less than 0.1 percent, to 1,049.55, while the Nasdaq composite index rose 7.07, or 0.3 percent, to 2,098.85.

About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 538.6 million shares compared with 444.3 million shares traded at the same point Monday.

Bond prices fell following the economic data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.44 percent from 3.43 percent late Monday.

Among stocks, Best Buy fell $1.28, or 3.2 percent, to $39.13, while Kroger fell $1.85, or 8.4 percent, to $20.26.

Crude oil rose 8 cents to $68.94 a barrel on the New York Mercantile Exchange.

In other trading, the Russell 2000 index of smaller companies rose 1.56, or 0.3 percent, to 601.59.

The dollar was mixed against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average rose 0.2 percent. In afternoon trading, Britain’s FTSE 100 rose 0.5 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 added 0.4 percent.