Stocks Climb on Consumer Confidence, Oil Prices

A late-day rebound gave stocks a moderate advance Tuesday as sharply lower oil prices and an unexpected jump in consumer confidence soothed investors' unease over a batch of mixed earnings.

The Dow gained 52.66, or 0.48 percent, to 11,103.71. On Monday, a flurry of acquisitions and upbeat earnings boosted the blue chip index by 182 points.

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Broader stock indicators also recovered. The Standard & Poor's 500 index added 7.97, or 0.63 percent, to 1,268.88, and the Nasdaq composite index rose 12.06, or 0.58 percent, to 2,073.90.

Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange, where volume of 1.75 billion shares topped the 1.58 billion shares changing hands at the same point Monday.

The market fluctuated through much of the session after disappointing results from UPS Inc. (UPS) and 3M Co. (MMM) stoked concerns about the health of corporate profits. McDonald's (MCD) Corp. and AT&T Inc. (T) both had strong earnings, but anxiety over interest rates and geopolitical tension kept investors from extending a solid advance in the prior session.

Wall Street found some support from the day's economic news. Consumer confidence rose in July despite soaring gasoline prices, and modest slowdown in existing home sales last month also brightened hopes of a soft landing for the economy.

But while stocks managed to bounce back in the last hour of trade — the Dow Jones industrials reversed course and added as much as 83 points — analysts said the lack of a significant catalyst meant the move higher was not substantial and fit in with Wall Street's recent erratic behavior.

"I think there was some degree of relief when the market was able to hold to the lows and not follow the pattern of the past couple of months: following up days by giving everything back," said Russ Koesterich, senior portfolio manager at Barclays Global Investments. "The catalysts you would look for were all present in the morning, but the market traded lower."

Bonds pulled back, with the yield on the 10-year Treasury note rising to 5.07 percent from 5.04 percent late Monday. The U.S. dollar gained ground on the Japanese yen, while gold prices rose to about $620 an ounce.

Oil prices tumbled as energy traders awaited developments in the conflict between Israel and Hezbollah in Lebanon. A barrel of light crude sank $1.30 to $73.75 on the New York Mercantile Exchange.

Recent skittish trading has underscored Wall Street's lack of near-term confidence, with stocks regularly showing heavy swings but no clear direction. Investors have been troubled by the range of possible outcomes for interest rates and the economy, and analysts say they'll remain tentative until at least some of the variables are resolved.

"We're looking at a picture of the Fed having raised interest rates to levels above neutral, and may have to raise again," said Brian Gendreau, investment strategist for ING Investment Management. "The economy is slowing, and there are still concerns about inflation. Plus central banks around the world are also hiking rates."

In economic news, the Conference Board said its consumer confidence index for July increased 1.1 points to 106.5, compared with predictions of a 1.4-point drop. The market has been expecting higher gasoline prices and lending costs to strain consumer spending.

The Commerce Department said sales of existing homes slid 1.4 percent to 6.62 million in June, in line with forecasts of 6.6 million. The mild decline reinforced hopes for a gradual slowdown in the economy.

Altria Group Inc., the parent of cigarette maker Philip Morris and Kraft Foods Inc., said its quarterly profit edged up 2 percent and boosted its yearly forecast. Altria climbed 56 cents to $80.05.

DuPont Co.'s earnings slumped 4 percent but still topped estimates. DuPont rose 10 cents to $40.67.

AT&T saw an 81 percent surge in quarterly profit from progress in combining its former operations with SBC Communications Inc. AT&T gained $1.17 to $28.95.

McDonald's posted a steep 57 percent jump in earnings, lifted by sturdy restaurant sales both in Europe and the United States. However, investors locked in profits from early gains, with McDonald's falling 8 cents to $34.76.

Scotch tape and Post-it note maker 3M expressed caution about margins in some businesses. 3M slid $3.58 to $68.11.

UPS plunged $8.20 to $71.80 on its reduced full-year outlook, which overshadowed stronger-than-expected quarterly results.

Overseas, Japan's Nikkei stock average surged 1.42 percent. Britain's FTSE 100 added 0.3 percent, Germany's DAX index sagged 0.22 percent and France's CAC-40 was higher by 0.37 percent.

The Russell 2000 index of smaller companies advanced 6.68, or 0.97 percent, to 697.44.

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