Stocks were volatile Tuesday morning as investors welcomed Goldman
Sachs' better-than-expected earnings report, but remained wary amid
mixed readings on the economy, including a rise in a measure of
wholesale inflation.
The Dow Jones industrial average lost a few points over an hour into
the session. The broader Standard & Poor's 500 index and the
tech-heavy Nasdaq composite were both barely changed.
Goldman Sachs beats expectations. The investment bank reported sales
and earnings that fell from a year ago, but topped estimates, showing
that it continues to avoid the worst of the credit market fallout.
Goldman Sachs shares gained 1%.
However, other financial shares weakened. American Express declined
after brokerage Friedman Billings reiterated its "underperform" rating,
saying that it expects the company to see more losses going forward due
to the strapped consumer.
Best Buy tops forecasts. The electronics retailer reported a lower
quarterly profit that nonetheless topped estimates. The company also
reiterated its full-year sales and earnings forecasts. Investors seemed
to take a sell-the-news approach and sent Best Buy stock more than 3%
lower. Wholesale prices rise. The May Producer Price Index (PPI), a
measure of wholesale inflation, rose 1.4% versus forecasts for a rise
of 1%, reflecting the spike in food and energy costs. PPI rose 0.2% in
April. The so-called core PPI, which strips out volatile food and
energy prices, climbed 0.2%, as expected, after increasing 0.4% in the
previous month.
Housing market continues to weaken. Housing starts and building permits
both fell in May, with starts missing forecasts and permits, a measure
of builder confidence, topping estimates. The number of single-family
home starts fell to a 17-year low.
Manufacturing activity weakens. Industrial production fell 0.2% in May,
according to a Federal Reserve report Tuesday morning that was worse
than expected. Capacity utilization also dipped modestly, to 79.4% from
79.6% in the previous month.
Oil prices slide. U.S. light crude oil for July delivery fell 37 cents to $134.24 a barrel on the New York Mercantile Exchange.