Blue chip stock indexes finished with modest gains on Tuesday, while weakness from the semiconductor sector left the Nasdaq little changed. A decline in a gauge of May inflation had little effect on the market as many investors were waiting for Wednesday's consumer price index data to indicate the trend in inflation, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 25.01 points, or 0.24%, to 10,547.57. The broader Standard & Poor's 500 index was up 3.09 points, or 0.26%, to 1,203.91. The tech-heavy Nasdaq composite index rose 0.07 points to 2,069.03.
July West Texas Intermediate crude oil settled down 62 cents to $55.00 per barrel, in choppy trading ahead of Wednesday's weekly inventory data.
Up ahead, Wednesday's report on the May consumer price index is expected to remain mostly unchanged for May, with median estimates hovering around 0.1%. The core index is expected to rise 0.2%. Also on the docket: reports on business inventories for April and industrial production and capacity utilization for May.
In economic news Tuesday, the producer price index (PPI), a gauge of wholesale level inflation, fell 0.6% in May, while core prices rose 0.1%, a little weaker than expected. Those follow respective gains of 0.6% and 0.3% in April. On a year-over-year basis, overall May PPI decelerated to a 3.5% pace from 4.8% in April, while core prices were steady at a 2.6% rate.
U.S. retail sales fell 0.5% in May, while sales excluding autos were down 0.2%. Those follows an overall gain of 1.5% in April (revised from up 1.4%), and a 1.4% increase on ex-autos (revised from up 1.1%), so the data aren't quite as weak as the headlines suggest. Motor vehicles sales fell 1.6% after a 2.0% surge in April. Gas station sales also reversed, slumping 1.6% after a 2.2% increase. Apparel fell 0.8%.
"While good news for Treasury bulls and dollar bears, the data don't imply to us any return to a soft patch as gas prices have rebounded, while clothing was likely weakened from unseasonably cool weather," says Action Economics.
Dow component General Motors (GM) was up 4% after the Detroit News reported that the company is pressing the United Auto Workers union to reach a deal on cutting health care costs by the end of the month.
On the earnings front, Best Buy (BBY) and Lehman Brothers (LEH) posted strong quarterly results.
Best Buy shares jumped after the electronics retailer raised its fiscal year 2006 earnings per share guidance to $3.10-$3.25, up from previous $2.95-$3.10 range. The company continues to expect $30 billion in fiscal year 2006 revenue.
However, Pier 1 Imports (PIR) posted weak numbers.
Treasuries finished mixed Tuesday. Action Economics said the day was led by corrective curve steepening, as yields at the back end of the curve pushed significantly higher than shorter-term yields. This came despite the friendly producer price index number and the drop in retail sales for May. The yield on the 10-year note rose to 4.11%.
European stock markets finished slightly lower on Tuesday. London's FTSE 100 index was down 3.6 points, or 0.07%, to 5,046.8.
Germany's DAX index fell 7.52 points, or 0.16%, to 4,591.69. In Paris, the CAC 40 index lost 5.75 points, or 0.14%, to 4,197.74.
Asian markets finished mixed on Tuesday. In Japan, the Nikkei index rose 24.41 points, or 0.22%, to 11,335.92. In Hong Kong, the Hang Seng index lost 47.21 points, or 0.34%, to 13,904.81.