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Stocks seesaw after earnings, economic reports

July 15, 2009|Associated Press

Investors got the results they wanted from Goldman Sachs Group, but the stock market's response was just a modest pop.

Mixed economic data Tuesday reminded investors of the challenges businesses still face and left the market zigzagging all day. Stocks gained on a handful of strong earnings, while Treasuries tumbled on news of a jump in inflation.

Investors were pleased that Goldman Sachs' second-quarter earnings easily surpassed analysts' forecasts thanks to big gains in trading and underwriting. But 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, though its profit fell 3.5%.

Stocks could get a boost today after chip maker Intel issued a strong profit report and better-than-expected forecast after the market closed Tuesday.

Even with strong earnings reports, however, signals about the economy remain mixed.

Retail sales posted their largest gain in five months in June, but much of that increase came from higher gasoline prices. Prices for gasoline have fallen sharply since mid-June amid increasing concerns about energy demand, so the higher sales figures may not be sustainable.

Investors also were uneasy after a separate report showed wholesale prices rising far more than expected last month and the most since November 2007, partly because of higher energy costs. That sent yields climbing.

The earnings and economic reports over the next few weeks probably will make for some difficult days on Wall Street.

The stock market already has been drifting over the last 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.

The Dow rose 27.81 points, or 0.3%, to 8,359.49. The Standard & Poor's 500 index gained 4.79 points, or 0.5%, to 905.84, while the Nasdaq composite index climbed 6.52 points, or 0.4%, to 1,799.73.

The yield on the 10-year Treasury note jumped to 3.44% from 3.34% as its price fell nearly a point.

Goldman's results had little effect as investors' focus quickly turned to the rest of the financial industry.

"Here we have a best-in-class sort of company reporting outstanding results," said Craig Peckham, an analyst at 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 rose 22 cents to $149.66. Investors are also expecting reports from JPMorgan Chase, Bank of America and Citigroup this week.

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

Oil slipped 17 cents to $59.52 a barrel on the New York Mercantile Exchange.

In other trading, the Russell 2,000 index of smaller companies rose 3.21, or 0.7%, to 496.52.

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