NEW YORK – Wall Street bounced back from negative territory to close higher Tuesday after investors watched oil prices drop but remained cautious as two economic reports showed a slowdown in business activity and economic growth in the last month.
The Dow Jones industrial average was up 51.40 points, or 0.51 percent, at 10,173.92. The technology-heavy Nasdaq Composite Index was up 1.61 points, or 0.09 percent, at 1,838.10, while the Standard & Poor's 500 index was up 5.09 points, or 0.1 percent, at 1,104.24. All three indexes had been in negative territory for most of the trading session Tuesday.
Trading was moderate, with 1.1 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.3 billion shares were traded on Nasdaq, also below the 1.69 billion daily average last year.
Advancers led decliners by about 2 to 1 on the NYSE. On the Nasdaq, advancers led decliners by about 3 to 2.
Two economic reports put the brakes on markets early Tuesday. The Conference Board (search), a private forecasting group, said its measure of consumer sentiment fell to 98.2 from a revised 105.7 in July. Economists polled by Reuters had forecast a fall to 103.5.
Also, a report showed business activity in the U.S. Midwest expanded in August for a 16th straight month but at a slower pace than expected, as pricing pressures mounted. The National Association of Purchasing Management-Chicago (search) business barometer fell to 57.3 from 64.7 in July. Economists had forecast the index at 60.8.
Investors were also anticipating employment data due Friday from the U.S. Commerce Department. With the past two months showing anemic job growth, a weaker-than-expected figure could prompt the Federal Reserve to slow interest rate hikes.
However, oil prices provided some optimism for investors, as prices slid Tuesday after more than a week of sharp falls. U.S. light crude was down 13 cents at $42.15 a barrel on the New York Mercantile Exchange, after topping $49 per barrel last week, but investors feared that the damage from weeks of higher prices may have already been done.
Oil stocks, including Exxon Mobil Corp. (XOM) and ChevronTexaco Corp. (CVX), rose even as crude prices dipped. Shares of Exxon were up 97 cents at $46.10, while shares of ChevronTexaco rose $2, or 2.09 percent, at $97.50. Both trade on the NYSE.
Volume is expected to continue to be light this week, as investors are on edge during the Republican National Convention, which opened Monday in New York. Security remains tight amid concerns of attacks to disrupt the convention. The week before the Sept. 6 Labor Day holiday is also popular for summer vacation on Wall Street.
"Certainly the oil prices help, but to the extent that anybody's paying attention this week, they're focusing on the economic numbers," said Brian Pears, head equity trader at Victory Capital Management. "We're really going to need to see evidence that this summer was a soft spot and not something prolonged."
Technology shares saw pressure from a number of reduced forecasts in microprocessors. Intel Corp.'s (INTC) third-quarter earnings forecast was downgraded by Morgan Stanley, while J.P. Morgan Securities lowered its outlooks for communications chip makers Xilinx Inc. (XLNX) and Altera Corp. (ALTR) Intel shed 31 cents to $21.29, while Xilinx lost 7 cents to $27.43 and Altera fell 16 cents to $18.92.
Merck & Co. (MRK) edged higher 4 cents to $44.97 after a study it commissioned, designed to drive sales of its cholesterol drug Zocor (search), showed no discernible difference between taking Zocor and simply adhering to a low-cholesterol diet.
Charles Schwab Corp. (SCH) announced it would sell its Soundview Capital Markets division, purchased less than a year ago for $321 million, to Swiss bank UBS AG for just $265 million, part of Schwab's refocusing on its core businesses. Schwab was down 2 cents at $9.45.
Grocery store chain Albertsons Inc. (ABS) dropped 52 cents to $24.58 after the company's second-quarter earnings fell year-over-year. The company blamed continuing fallout from the California grocery worker's strike this spring, as well as higher health and welfare payments.
Shares of Six Flags Inc. (PKS) rose more than 24 percent and was the top gainer on the NYSE after Daniel Snyder, owner of the Washington Redskins football team, bought an 8.8 percent stake in the amusement park operator. The stock was up $1.11 at $5.57.
The Russell 2000 index of smaller companies was up 3.37, or 0.6 percent, at 547.93.
Overseas, Japan's Nikkei stock average fell 0.9 percent. In afternoon trading, Britain's FTSE 100 closed down 0.7 percent, France's CAC-40 fell 1.2 percent for the session and Germany's DAX index dropped 1.4 percent.
Reuters and The Associated Press contributed to this report.