Stocks finished an erratic session moderately higher Tuesday after investors sorted through a mixed batch of data that included a hopeful report on manufacturing, uneven corporate earnings and signs of strong inflation.
After a recent spate of disappointing readings on the economy, the Federal Reserve Bank of New York reported that manufacturing in the New York region expanded modestly in April after shrinking at a record clip in March. Wall Street had expected another contraction.
And in contrast to mostly unimpressive first-quarter earnings so far, Johnson & Johnson said its profit jumped 40% in the period, thanks to rising sales and declining costs.
But anyone inclined to worry about inflation had plenty to be concerned about Tuesday. Oil prices spiked above $114 a barrel, retail gasoline prices reached new highs and the Labor Department's producer price index registered a 1.1% increase for March, much more than anticipated. The "core" index, which strips out food and energy prices, rose 0.2%, as expected.
Increases in core producer prices have slowed over the last three months, so inflation is considered unlikely to keep the Federal Reserve from lowering interest rates again if the economy weakens further. But soaring food and energy prices have led consumers to pare back their discretionary spending -- and that is hurting some corporate profits.
"My guess is people are still really concerned about the inflation impact down the road," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. "If oil stays where it is, it's going to be a problem."
The Dow Jones industrial average climbed 60.41 points, or 0.5%, to 12,362.47.
The Standard & Poor's 500 index gained 6.11 points, or 0.5%, to 1,334.43, and the Nasdaq composite index rose 10.22 points, or 0.4%, to 2,286.04.
The Russell 2,000 index of smaller companies jumped 5.99 points, or 0.9%, to 692.06.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange.
Government bond yields rose in response to the inflation and manufacturing news. The yield on the benchmark 10-year Treasury note rose to 3.60% from 3.51% late Monday.
Gold prices rose, while the dollar fell against other major currencies.
With high oil prices dimming the outlook for the airline industry, the proposed combination of Delta Air Lines and Northwest Airlines weighed on the stock market Tuesday, with investors uneasy about the all-stock deal. Delta fell $1.32, or 13%, to $9.16, while Northwest fell 94 cents, or 8.4%, to $10.28.
Johnson & Johnson slipped 9 cents to $65.65, but the healthcare-product maker's earnings boosted the overall market, RBC's Dow said.
Financial stocks including Citigroup and JPMorgan Chase staged a mild recovery after a string of down days. JPMorgan releases its first-quarter results today, Citigroup reports Friday, and Bank of America chimes in next week. JPMorgan rose 62 cents to $42.12. Citigroup added 29 cents to $22.80, and Bank of America ended unchanged at $35.58.
In other market highlights:
Crocs plummeted $7.68, or 43%, to $10.11 after it slashed earnings and sales forecasts, prompting some analysts to wonder whether consumers were tiring of the shoe maker's colorful plastic clogs.
Shares of Fremont General lost half their remaining value, falling 27 cents to close at 27 cents, after the New York Stock Exchange said the stock would be delisted before trading begins Thursday. The Brea-based former sub-prime lender announced a deal Monday to sell its bank branches and deposits.
Overseas, key stock indexes climbed 0.8% in Japan, 1.3% in Britain, 0.5% in Germany and 0.3% in France.