By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks wavered between gains and
losses on Tuesday, but the Dow industrials remained on track for a
record close, as Wall Street weighed earnings and a regional
factory gauge.
"As I watch stock prices move up a lot faster than earnings, it
causes me to be a lot more cautious," said Alan Skrainka, chief
investment officer at Cornerstone Wealth Management in Des Peres,
Mo.
"It's a wonderful time to rebalance portfolios; I think I'll
feel pretty good about that come September. Unless things change
dramatically, September is the month that we start tapering," said
Skrainka, referring to potential reductions in the Federal
Reserve's $85 billion in monthly bond purchases.
After a 58-point climb to an intraday record of 15,604.22, the
Dow Jones Industrial Average (DJI) was lately up 43.77 points, or
0.3%, at 15,589.32, with United Technologies Corp. (UTX) pacing
blue-chip gains after reporting quarterly earnings above Wall
Street estimates.
United Technologies' share movement "alone is worth some 20-odd
Dow Jones points," said Mark Luschini, chief investment strategist
at Janney Montgomery Scott. "The market is a bit overbought at this
juncture. It charged to new highs in a basically straight line
before running into a wall of mixed earnings," he added.
Dow component Travelers Cos. (TRV) fell 2.9% as rising interest
rates weighed on its bond portfolio, with the company saying it
would cut jobs and auto-insurance prices.
"When interest rates go up, bond prices go down; when interest
rates go up, long-term bonds go down more than short-term bonds,"
said Skrainka.
Dow component DuPont (DD) shares rose after the chemical
producer reported a drop in quarterly earnings and said it was
considering a spinoff or potential sale of its
performance-chemicals business.
Halting gains after a four-session winning streak, the S&P
500 index (SPX) fell 1.5 points to 1,694.03, with consumer staples
leading sector losses and energy leading sector gains.
The S&P 500 rose to its 23rd record close this year on
Monday.
Wall Street had began modestly higher as companies from DuPont
to Texas Instruments Inc. (TXN) beat earnings expectations.
Stocks relinquished much of their gains as the Federal Reserve
Bank of Richmond said manufacturing activity in the central
Atlantic region declined in July, with a seasonally adjusted
composite index of manufacturing activity down 18 points in July to
a reading of -11. The Richmond Fed also said that activity in the
service sector softened in July.
"While the Richmond manufacturing survey is never market moving
itself, its weakness following the better New York and Philly
reports points to a still mixed bag in manufacturing," emailed
Peter Boockvar, chief market strategist at the Lindsey Group
LLC.
United Parcel Service Inc. (UPS) shares held steady after the
global shipper reported a smaller quarterly profit, while Lockheed
Martin Corp. (LMT) gained 2.1% after an earnings beat.
Freeport-McMoRan Copper & Gold Inc. (FCX) climbed 2.3% after
the biggest publicly traded copper producer reported second-quarter
earnings that topped estimates.
Netflix Inc. (NFLX) dropped 4.4% a day after the
online-entertainment service reported subscriber growth below some
estimates in the second quarter, although earnings surged compared
with the same period a year ago.
CapitalSource Inc. (CSE) jumped 22% after PacWest Bancorp (PACW)
said it would acquire the commercial lender for about $2.29 billion
in cash and stock. Sourcefire Inc. (FIRE) shares rallied 28% after
Cisco Systems Inc. (CSCO) agreed to buy the cybersecurity company
in a deal worth about $2.7 billion.
Tech giant Apple (AAPL) will likely garner much of the attention
Tuesday after weak results from Microsoft Corp. (MSFT) and Google
Inc. (GOOG) last week. Apple will release quarterly earnings after
the market close on Tuesday.
The Nasdaq Composite (RIXF) lost 13.51 points, or 0.4%, to
3,586.88.
Advancers outpaced decliners on the New York Stock Exchange,
where 352 million shares traded as of 2:25 p.m. Eastern. Composite
volume neared 2.1 billion.
The dollar (DXY) declined against the currencies of U.S. trading
partners and Treasury yields rose, with the 10-year yield (10_YEAR)
rising two basis points to 2.50%.
Oil (CLU3) rose above $107 a barrel and gold fell 0.1% to
$1,334.70 an ounce after an impressive run on Monday, when the
August contract (GCQ3) posted the heftiest one-day rally in more
than a year.
"Yesterday was an impressive move, although I'm not surprised,
given commercial exposure" is at multi-year lows, said
Luschini.
Short-covering likely factored into gold's bounce after prices
fell more than 30% from late 2012, with Federal Reserve Chairman
Ben Bernanke's pushback against monetary tightening a factor
driving the action, wrote Marc Chandler, global head of currency
strategy at Brown Brothers Harriman & Co., in emailed
commentary.
But the impact could be short-lived.
"Despite the market's recent misinterpretation of the Fed's tone
regarding QE [quantitative easing] exit, genuine inflation concerns
are nowhere on the horizon, neither is systemic risk -- two key
variables that typically support sustained gold rallies. On the
demand side, India has just placed yet more restrictions on gold
imports," he wrote.
Tuesday's data calendar also had the Federal Housing Finance
Agency's home-price index for May rising 0.7%.
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