Stocks fluctuate amid better results from Goldman, mixed economic data

Stocks seesaw on earnings, mixed economic data

NEW YORK — Investors got the solid results from Goldman Sachs they had been looking for Tuesday, but found little else to calm their nerves about the fragile state of the economy.

Stocks fluctuated in a narrow range throughout the day, with some gaining on a handful of strong earnings, and others held in check by downbeat economic data. Treasurys tumbled on news of a jump in inflation.

“You’re seeing one step back, one step forward and no one is really sure which way to go,” said Doug Roberts, chief investment strategist at Channel Capital Research. “It’s an environment of paralysis.”

Investors were pleased that Goldman Sachs Group Inc.’s second-quarter earnings easily surpassed analysts’ forecasts thanks to big gains in trading and underwriting. But the release of the results came as something of an anticlimax, as anticipation of a strong report sent the entire stock market soaring Monday.

Johnson & Johnson also had better-than-expected results, although its profits fell 3.5 percent.

Meanwhile, the day’s economic reports reminded investors of the challenges businesses still face. Retail sales posted their largest gain in five months in June, but much of that increase came from higher gas prices. Prices for gas have fallen sharply since mid-June amid increasing concerns about energy demand, so the higher sales figures may not be sustainable.

Investors were also uneasy after a separate report showing wholesale prices rose far more than expected last month and the most since November 2007, due partly to higher energy prices. That sent Treasurys falling and their yields climbing.

The mix of earnings and economic reports over the next few weeks is likely to make for some difficult days on Wall Street. The stock market has already been drifting over the past month, having given up on a massive spring rally as troubling signs began to emerge on the economy including rising unemployment and waning consumer confidence. Unless companies start issuing promising outlooks for the second half of the year, it will be hard, if not impossible, for the market to resume that rally.

“We need a general consistent pattern of bullish news coming out to turn this market around,” said Darin Newsom, senior analyst at DTN.

In late afternoon trading, the Dow rose 12.92, or 0.2 percent, to 8,344.60. The Standard & Poor’s 500 index rose 2.55, or 0.3 percent, to 903.60, while the Nasdaq composite index rose 5.13, or 0.3 percent, to 1,798.34.

About two stocks rose for every one that fell on the New York Stock Exchange where volume came to 625.6 million shares, down from 677.1 million at the same time the day before.

The yield on the 10-year Treasury note jumped to 3.44 percent from 3.35 percent as its price fell nearly a point. Long-term government debt tends to be sensitive to reports of higher prices, as inflation erodes the value of fixed-income securities over time.

Investors sent stocks sharply higher on Monday, lifting the Dow 2.3 percent, after Meredith Whitney, a respected banking analyst, upgraded her view on Goldman, stoking hopes that financial companies will show continued signs of improvement this quarter.

But Goldman’s actual results had little impact as investors’ focus quickly turned to the rest of the financial sector and what those reports might have to say about the state of the industry.

“Here we have a best-in-class sort of company reporting outstanding results,” said Craig Peckham, an analyst with Jefferies & Co. “The earnings reports we get in the financial sector from here on out quite honestly are coming from companies that just don’t have the same kind of cachet.”

Goldman shares fell 52 cents to $148.92. Later this week, investors will get reports from JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc.

One troubling indication that the financial sector has not fully recovered: Commercial lender CIT Group Inc. is talking with the government about receiving emergency assistance to help solve liquidity problems.

Johnson & Johnson shares gained 42 cents to $58.14. Investors will get earnings reports later Tuesday from chipmaker Intel Corp. and fast-food restaurant operator Yum Brands Inc.

There were mixed forecasts from several companies. Dell Inc. warned late Monday that quarterly gross margins will fall below first-quarter levels due to higher component costs and pressure to keep prices low. Shares sank more than 7 percent, falling $1.02, or 7.8 percent, to $12.

Railroad operator CSX Corp. said it expects shipping demand to sink by double-digits again this quarter, but not as drastically as the 21 percent decline in the second quarter. Shares jumped $2.11, or 6.5 percent, to $34.65.

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

Oil prices reversed early gains and slipped 23 cents to $59.46 a barrel on the New York Mercantile Exchange.

In other trading, the Russell 2000 index of smaller companies rose 2.93, or 0.6 percent, to 496.24.

Overseas, Japan’s Nikkei stock average gained 2.3 percent. Britain’s FTSE 100 rose 0.9 percent, Germany’s DAX index rose 1.3 percent, and France’s CAC-40 gained 1.0 percent.