Stocks pull back a bit

NEW YORK (CNNMoney.com) -- Wall Street investors exercised some caution after a sharply higher start Tuesday, amid upbeat General Motors earnings, a flurry of economic readings, and residual credit market concerns.

The Dow Jones industrial average (up 61.86 to 13,420.17, Charts) climbed 46 points, or about 0.4 percent, 2 hours into the session, after climbing by as much as 138 points after the market open.

The broader S&P 500 (up 5.24 to 1,479.15, Charts) rose about 0.3 percent while the tech-fueled Nasdaq Composite index (up 4.41 to 2,587.69, Charts) edged higher.

"There is a ying and a yang going on," said James Awad, chairman at Awad Asset Management.

"The ying is that profits are better than expected...the yang is the lingering fear that there is more to come in terms of credit problems and people don't want to get carried away."

Stocks jumped at the start of the session, helped by better-than expected earnings from embattled automaker General Motors and from Sun Microsystems helped lift stocks at the start of the session.

Dow component GM (up $1.03 to $33.64, Charts, Fortune 500) sped past forecasts, posting its first profitable quarter in over two years, sending its shares over 3 percent higher.

Sun Microsystems, which produces computer servers, reported better-than expected earnings after the closing bell Monday. Sun (up $0.34 to $5.23, Charts, Fortune 500) shares climbed more than 7 percent in morning trade.

But credit market fears, which helped send the Dow industrials tumbling 585 points last week, appeared to continue to weigh on the minds of investors.

Late Monday, the mortgage insurer MGIC Investment Corp. (down $4.01 to $41.43, Charts), said it may have to write down the entire value of a $516 million investment in a subprime residential mortgage venture.

Investors around the world have been rattled by signs of tougher conditions in credit markets, since tighter credit could raise the cost of borrowing for companies, hurting corporate earnings. This is likely to slow the buyout boom, which has helped prop up stock prices.

Wall Street, however, did receive some relatively encouraging numbers from the economic front Tuesday.

In the June personal spending and income report, the so-called core PCE deflator, a favored inflation gauge of the Federal Reserve, came in lower than expected and within the central bank's comfort range.

And consumer confidence climbed to its highest level in nearly six years, the Conference Board reported Tuesday, handily beating forecasts.

One troubling spot, however, was a surprise decline in construction spending in June. The Commerce Department reported that spending fell 0.3 percent during the month, versus forecasts for a 0.2 percent gain.

In major U.S. corporate news, Dow Jones' controlling Bancroft family has reportedly accepted News Corp.'s (down $0.16 to $22.68, Charts, Fortune 500) $5 billion offer for the Wall Street Journal publisher, according to a company executive. Dow Jones (up $5.54 to $57.10, Charts) shares climbed nearly 11 percent in late morning trade on the New York Stock Exchange.

Billionaire investor Nelson Peltz said Monday that his restaurant company, Triarc (down $0.09 to $14.29, Charts), would be prepared to offer $37 to $41 a share for struggling rival Wendy's International (up $1.70 to $35.39, Charts), a premium of 10 to 22 percent over its Monday closing price. But he gave the company until Wednesday to agree to a confidentiality agreement for talks to continue.

Shares of British drugmaker GlaxoSmithKline (up $1.75 to $51.18, Charts) gained over 3 percent in morning trade after a Food and Drug Administration advisory panel recommended that Glaxo's best-selling diabetes drug, Avandia, remain on the market despite an analysis showing links to increased risk of heart attack.

Oil prices climbed Tuesday and moved to with a dollar of its record high of $78.40 hit a year ago, as the price of U.S. light crude gained 59 cents to $77.41 a barrel.

Treasury prices edged lower, lifting the yield on the 10-year note to 4.82 percent up from 4.8 percent late Monday. The dollar edged lower versus the euro and was higher against the yen.

In global trade, most Asian markets finished the session higher. European stocks moved sharply higher.