Nervous investors collected profits and sent stocks lower Tuesday, wiping out an early advance amid conflicting signals about inflation and consumer spending.

The market pulled back when the Dow Jones industrials reached an eight-month high shortly after midday. Investors have been uneasy for months about inflation and soaring oil prices, and their anxiety was fed by a Labor Department report that energy costs led a jump in wholesale prices last month. Many decided the safest strategy was to sell.

Meanwhile, a better-than-expected monthly retail sales report that might have supported the market was undercut by a weak sales outlook from Target Corp., which also clouded strong results at Home Depot Inc.

Wall Street's retreat also came despite crude oil settling below $57 a barrel for the first time since June 30. A barrel of light crude dropped 71 cents to $56.98 on the New York Mercantile Exchange.

According to preliminary calculations, the Dow lost 10.73, or 0.1 percent, to 10,686.44. During the session, the Dow rose nearly 45 points to reach its highest level since March 15.

Broader stock indicators also gave up their gains. The Standard & Poor's 500 index finished down 4.70, or 0.38 percent, at 1,229.01, and the Nasdaq composite index declined 14.21, or 0.65 percent, to 2,186.74.

Bonds rose, with the yield on the 10-year Treasury note tumbling to 4.56 percent from 4.61 percent late Monday. The dollar was mostly lower against other major currencies, and gold prices were little changed.

Investors had little reaction to comments from Federal Reserve chair nominee Ben Bernanke, who told a Senate committee that his top priority will be keeping current Chairman Alan Greenspan's policy of fighting inflation.

It was the specter of higher prices that unnerved Wall Street. The Labor Department's producer price index — a measure of wholesale prices often seen as a barometer of future inflation — grew 0.7 percent in October as soaring energy prices drove up manufacturers' costs. Economists were expecting the index to be unchanged last month.

But core PPI — setting aside volatile food and energy prices — retreated 0.3 percent, compared with expectations for a 0.2 percent gain and September's 0.3 percent growth, the department added.

Meanwhile, the Commerce Department said retail sales rose 0.9 percent in October, excluding the effect of a recent slide in auto demand. Economists were looking for a 0.3 percent gain, following a 1.1 percent rise the month before.

Including car sales, retail sales were down 0.1 percent, the Commerce Department said. That reversed a 0.3 percent increase in September but trounced estimates for a 0.7 percent decrease.

Still, some analysts remained upbeat about consumer spending as oil and gas prices pull back from record September levels and their impact eases.

"Once things get through the day-to-day digestion period, broadly speaking the market is still pretty good," said Jack Caffrey, equity strategist for JPMorgan Private Bank. "The trend to lower energy erases some of the fears of how long consumers can hold up. It gives the market enough to fear but sets us up for gradual appreciation going into year-end."

Although monthly sales declined less than forecast, the retail sector was rattled by Target's disappointing sales outlook. Target, which said late Monday it expected November sales growth to lag earlier guidance, tumbled $4.13 to $54.30.

Other retailers had better news. Home Depot's third-quarter profit jumped 17 percent and beat Wall Street estimates by 4 cents per share. Sales rose 11 percent, and the company boosted its annual estimates. But Target's outlook weighed on Home Depot, which dropped 17 cents to $42.40.

Department store J.C. Penney Co. said its earnings surged 57 percent last quarter, but blamed high energy costs for its cautious holiday sales outlook. Penney slid $1.54 to $52.21.

Staples Inc. lost $1.06 to $22.80 after the office products supplier said its quarterly profit rose 14 percent, which trailed its earnings growth in recent years.

Elsewhere, acquisition activity boosted some healthcare stocks. Johnson & Johnson revised its bid for Guidant Corp. to $21.5 billion, about $4 billion less than the original deal. Last week, Guidant sued Johnson & Johnson for trying to back out as Guidant came under scrutiny for recalls of its implantable heart devices. Johnson & Johnson rose $2.32 to $62.83, and Guidant added $4.75 to $62.50.

Allergan Inc., maker of wrinkle treatment Botox, made a $3.2 billion cash and stock proposal for Inamed Corp., which produces breast implants. Inamed previously agreed to be acquired by Medicis Pharmaceutical Corp. for about $2.8 billion. Inamed surged $6.84 to $81.28, while Allergan dropped $2.60 to $96.25 and Medicis slid $2.97 to $26.70.

Declining issues outpaced advancers by 11 to 5 on the New York Stock Exchange, where volume of 1.69 billion shares topped the 1.4 billion shares traded on Monday.

The Russell 2000 index of smaller companies dropped 7.70, or 1.16 percent, to 656.23.

Overseas, Japan's Nikkei stock average lost 0.17 percent. Britain's FTSE 100 slid 0.56 percent, Germany's DAX index gained 0.36 percent, and France's CAC-40 was lower by 0.12 percent.