Dow on record run

A tame inflation report, more merger news and solid earnings drive the blue-chip average higher, but the gauge couldn't hold on to a major milestone.

By Jessica Dickler, staff writer

NEW YORK ( -- The Dow Jones industrial average finished in record territory for the fourth straight session Tuesday and surpassed the 14,000 mark for the first time ever, on a tame inflation reading and several strong earnings reports.

The Dow (up 20.57 to 13,971.55, Charts) gained about 0.2 percent, after touching a new intraday high of 14,021.95 in afternoon trade.

The New York Stock Exchange's message board tells the Dow 14,000 story.

Year-to-date, the blue-chip index is up 12.15 percent and has notched 31 record closes so far.

The tech heavy Nasdaq composite index (up 14.96 to 2,712.29, Charts) added 0.6 percent to close at a fresh 6-1/2 year high, while the broader Standard & Poor's 500 index (down 0.15 to 1,549.37, Charts) ended near breakeven after reaching a new intraday high of 1555.32.

Stocks were mixed Monday ahead of the week's earnings figures and inflation reports, but all three major gauges rose again Tuesday after the Labor Department said prices of goods at the wholesale level were rising at a moderate pace and Dow components Coke and Johnson and Johnson posted better-than-expected earnings. The Dow finished higher for the fifth day in a row.

"We're caught up in a wave of good earnings reports and merger announcements," said Fred Dickson, chief market analyst at D.A. Davidson & Co.

Going forward, "I think we're going to stay close to 14,000 or above," Dickson said, even with big earnings reports and testimony from Federal Reserve Chairman Ben Bernanke on deck. Although, higher oil prices could add "some underlying volatility," he added.

On the move

Of the 30 stocks in the Dow, 15 rose and 15 fell.

After the market close, Dow component Intel (up $0.38 to $26.33, Charts, Fortune 500) posted earnings that were just in line with analysts' estimates, sending shares down 5 percent on Inet.

And Yahoo (up $0.83 to $27.53, Charts, Fortune 500) fell 2 percent in extended trade after the media company reported earnings in line with previously lowered expectations.

Earlier Tuesday, Coca-Cola (down $0.68 to $53.17, Charts, Fortune 500) reported a rise in quarterly profit, boosted by strength in emerging markets.

Johnson & Johnson (down $1.06 to $62.74, Charts, Fortune 500) also posted solid earnings, with its results exceeding Wall Street's estimates.

Merrill Lynch (down $1.19 to $86.20, Charts, Fortune 500) beat second-quarter earnings estimates.

Wells Fargo (up $0.14 to $35.59, Charts, Fortune 500) added 1 percent after the bank said second-quarter profit rose 9 percent.

Shares of KeyCorp (up $1.61 to $36.71, Charts, Fortune 500) jumped 5 percent after the Midwest bank said second-quarter profit rose 8 percent, surpassing estimates.

Jefferies (up $1.04 to $29.75, Charts) rallied 4.5 percent after the investment bank said second-quarter earnings rose above estimates.

In deal news, Dutch-based chemical company Basell agreed to buy Lyondell Chemical (up $6.93 to $47.05, Charts, Fortune 500) for $48 a share, or about $12.1 billion. Including the assumption of debt, the deal is valued at $19 billion.

Plains Exploration & Production (down $3.31 to $47.88, Charts) agreed to buy oil and gas producer Pogo Producing (up $7.02 to $57.50, Charts) for $3.6 billion in stock and cash.

And the CEO of Dow Jones (down $0.50 to $56.45, Charts) has tentatively agreed to News Corp.'s (up $0.62 to $24.25, Charts, Fortune 500) $5 billion takeover bid, although approval from the Bancroft family is still required, according to a report in the Wall Street Journal.

In other news, Dow component American Express (up $2.86 to $64.74, Charts, Fortune 500) surged nearly 5 percent after Goldman Sachs raised its rating on the credit card company.

And after the closing bell, Microsoft (up $0.75 to $30.78, Charts, Fortune 500) said the head of its gaming business, Peter Moore, was leaving the software company to join Electronic Arts (up $1.38 to $49.47, Charts).

Market breadth was mixed. Losers edged out winners on the New York Stock Exchange by a margin of nine to seven on volume of 1.4 billion shares. Gainers barely beat decliners on the Nasdaq on volume of 2.2 billion shares.

Eye on the economy

Before the opening bell, the government said wholesale prices fell 0.2 percent in June, versus expectations for a rise of 0.1 percent.

The core Producer Price Index, which excludes food and energy costs, rose 0.3 percent. That exceeded consensus forecasts for a gain of 0.2 percent, but wasn't enough to rattle investors.

"That there isn't increasing inflationary pressure added to the market's momentum," according to Art Hogan, chief market strategist at Jefferies & Co. Plus, the PPI report "gives us a window into the CPI report tomorrow," he added.

In addition to the closely watched CPI report, economic readings on housing starts and building permits are also due out Wednesday.

And Federal Reserve Chairman Ben Bernanke is scheduled to deliver the central bank's midyear economic forecast Wednesday as well.

Oil prices turned lower, after reaching an 11-month high. U.S. light crude for August delivery lost 10 cents to $74.05 a barrel on the New York Mercantile Exchange.

Treasury prices fell, with the yield on the benchmark 10-year note rising to 5.07 percent from 5.04 percent late Monday.

The dollar held near a record low against the euro and was steady against the yen.

COMEX gold for August delivery slipped 40 cents to $665.90 an ounce.  Top of page