Stocks rise slightly as investors continue to gauge earnings, economy
NEW YORK -- Investors are making only modest moves following a week-long rally as they question how quickly the economy can recover.
Stocks zigzagged in a tight range and were slightly higher in late afternoon trading Tuesday.
Weakness in regional banks tugged at the market after Regions Financial and Comerica posted second-quarter losses. That offset some enthusiasm over results at Caterpillar , which raised its full-year profit forecast.
Caterpillar gave a modest lift to the Dow Jones industrials but broader indexes traded flat.
Worries about small-business lender CIT Group flared up again after the company said a $3 billion loan from bondholders still might not be enough to cover a cash drain. Stocks had risen Monday on hopes the company would be able to avoid bankruptcy.
Caterpillar joined other major companies in issuing an improved 2009 profit forecast, even as it said its second-quarter profit fell 66% on weaker sales. Shares in the heavy equipment maker, considered a bellwether of the global economy, rose about 8%.
The good news from Caterpillar was counterbalanced by more caution about the economy from Federal Reserve Chairman Ben Bernanke. Bernanke told Congress the Fed had the tools necessary to ease off its financial rescue measures in due course. He also repeated the Fed's forecast that the economy should start growing again in the second half of this year, but only modestly and with rising unemployment.
Bernanke is stressing "that it is going to be a slow recovery with slow growth," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams.
Stocks charged higher last week, when an upgrade on Goldman Sachs Group by an influential banking analyst stirred hopes that bank earnings would show an improvement in the health of the financial industry. Since then, major indexes are up about 8%, halting a month-long slide driven by fears that a recovery would not come as soon as hoped.
