Bull run loses steam

NEW YORK (CNNMoney.com) -- Early gains on Wall Street all but evaporated in Tuesday afternoon trading, as investors eyed new credit market developments and the latest corporate earnings.

Oil prices, which neared record highs, also pressured stocks.

The Dow Jones industrial average (up 35.52 to 13,393.83, Charts) was only 16 points, or 0.1 percent, higher with 2 hours remaining in the session, after climbing by as much as 138 points after the market open.

The broader S&P 500 (up 3.61 to 1,477.52, Charts) inched higher while the tech-fueled Nasdaq Composite index (down 1.29 to 2,581.99, Charts) edged lower.

After a bullish start to the session, investors exercised some restraint as new credit market concerns emerged.

Mortgage lender American Home Mortgage (up $0.00 to $10.47, Charts) said Tuesday afternoon it was unable to borrow and that it was considering liquidating its assets.

Late Monday, the mortgage insurer MGIC Investment Corp. (down $4.51 to $40.93, 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.

Credit market fears helped send global stock markets tumbling last week, with the 30-stock Dow industrials falling 585 points, posting its biggest percentage drop since March 2003.

Better-than expected earnings from Sun Microsystems (up $0.32 to $5.21, Charts, Fortune 500) and embattled automaker General Motors failed to maintain the early runup. GM (up $0.51 to $33.12, Charts, Fortune 500) posted its first profitable quarter in over two years, while Sun, which makes computer servers, reported better-than expected earnings after the closing bell Monday.

Wall Street also received 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.

Two troubling areas, however, were a surprise decline in construction spending in June, and a report that revealed Midwest business activity grew at a slower-expected pace in July.

In major U.S. corporate news, Dow Jones' Bancroft family members, which own a 32 percent stake in the Wall Street Journal publisher, agreed to back News Corp.'s (down $0.02 to $22.82, Charts, Fortune 500) $5 billion offer, the Journal reported.

Dow Jones (up $6.01 to $57.57, Charts) shares climbed over 11 percent in afternoon trade on the New York Stock Exchange.

Billionaire investor Nelson Peltz said Monday that his restaurant company, Triarc (down $0.06 to $14.32, Charts), would be prepared to offer $37 to $41 a share for struggling rival Wendy's International (up $1.39 to $35.08, Charts).

Shares of British drugmaker GlaxoSmithKline (up $1.83 to $51.26, Charts) gained nearly 4 percent 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 briefly climbed above $78 a barrel Tuesday and nearing its record high of $78.40 hit a year ago. U.S. light crude jumped $1.11 to $77.94 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.

COMEX gold for December gained 40 cents to $677 an ounce.

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