New York — Investors got the solid results from Goldman Sachs they wanted on Tuesday, but the gains were modest after a big rally the day before.
Mixed economic data reminded investors of the challenges businesses still face and left the market zig-zagging all day. Some stocks gained on a handful of strong earnings, while U.S. Treasurys tumbled on news of a jump in inflation at the wholesale level in June.
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 per cent.
In economic data, U.S. 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.
According to preliminary calculations, the Dow rose 27.81, or 0.3 per cent, to 8,359.49. The Standard & Poor's 500 index rose 4.79, or 0.5 per cent, to 905.84, while the Nasdaq composite index rose 6.52, or 0.4 per cent, to 1,799.73.
In Toronto, S&P/TSX index closed up 94.22 points to 9,986.15 after surging 145 points Monday. The TSX energy sector edged up 0.8 per cent even as the August crude contract in New York moved down 17 cents to $59.52 (U.S.) a barrel.
The Canadian dollar was 1.21 cents higher to 88.03 cents.
With a file from The Canadian Press
