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.
Goldman Sachs' gs second-quarter earnings easily surpassed analysts' forecasts thanks to big gains in trading and underwriting. Johnson & Johnson jnj also had better-than-expected results although its profits fell 3.5%.
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."
The Dow Jones industrial average rose 27.81, or 0.3%, to 8,359.49. The Standard & Poor's 500 index rose 4.78, or 0.5%, to 905.83, while the Nasdaq composite index rose 4.78, or 0.4%, to 1,799.73.
The days's economic reports, though, were troubling. Retail sales posted their largest gain in five months in June, but much of that increase came from higher gas prices, which could become a worry over the long term. Investors were also uneasy after a separate report showing wholesale prices rose far more than expected in June and the most since November 2007, due partly to higher energy prices.
The 1.8% jump in the producer price index, which tracks the costs of goods before they reach store shelves, was much more than the 0.9% gain economists expected. That sent Treasurys falling and their yields climbing.
Anticipation of Goldman's earnings report sent the entire stock market soaring Monday, so the release of the report came as something as an anti-climax. Meanwhile, the economic data reminded investors of the challenges businesses still face.
"There's just a general lack of enthusiasm in this market," said Darin Newsom, senior analyst at DTN. "We need a general consistent pattern of bullish news coming out to turn this market around."
The mix of earnings and economc 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.
The yield on the 10-year Treasury note jumped to 3.44% from 3.35% 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%, 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 cache."
Later this week, investors will get reports from other high-profile banking companies JPMorgan Chase JPM, Bank of AmericaBAC and CitigroupC.
Investors will be looking at earnings for signs that the banking sector has stabilized after last fall's near collapse. In a sign that the sector has not fully recovered, CIT GroupCIT, a lender to small and midsize business, is talking with the government about receiving emergency assistance to help solve liquidity problems.
Aside from Goldman and J&J, investors will get quarterly results later Tuesday from chipmaker IntelINTC and fast-food restaurant operator Yum Brands YUM.
There were mixed forecasts from several companies. Delldell warned late Monday that quarterly gross margins will fall below first-quarter levels due to higher component costs and pressure to keep prices low.
Railroad operator CSX csx said it expects shipping demand to sink by double-digits again this quarter, but not as drastically as the 21% decline in the second quarter.
The dollar fell against other major currencies, while gold prices rose.
Oil prices reversed early gains and slipped 28 cents to $59.41 a barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average gained 2.3%. Britain's FTSE 100 rose 0.9%, Germany's DAX index rose 1.3%, and France's CAC-40 gained 1.0%.