Stocks end mixed on record oil prices
Wall Street slips just a bit as investors weigh oil's record price, the stronger dollar and the Fed's upbeat statements about economy.
NEW YORK (CNNMoney.com) -- Wall Street finished slightly down Tuesday as record oil prices lured investors away from stocks. Stocks also slipped on disappointing guidance from Wal-Mart, despite a stronger dollar and positive statements on the U.S. economy from the Federal Reserve.
The Dow Jones industrial average (INDU) closed down 44 points or 0.3%. The broader Standard & Poor's 500 (SPX) index closed just a half percentage point lower than Friday's close. But tech-heavy Nasdaq composite (COMP) closed the day up about 0.3%.
Stocks had risen in the early going, following the release of a better-than-expected report on April retail sales - beyond the auto sector. But the advance was tepid and stocks turned lower, as investors considered the day's corporate news and surging commodity prices.
"Today's news suggested the economy is not as weak as most people think, but oil prices put a little bit of a damper on trading," said Avalon Partners Chief market economist Peter Cardillo. He said the market "held its own" Tuesday because dollar edged higher against the euro and yen.
According to Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, with oil at $125 a barrel, there isn't much reason to buy stocks, particularly after the major gauges jumped more than 10% in a 7-week period, bouncing between the March lows and early May.
Company news: Hewlett-Packard (HPQ, Fortune 500) said Tuesday that it is buying Electronic Data Systems (EDS, Fortune 500) for $13.9 billion in cash, confirming earlier speculation. HP also said fiscal second-quarter results will top current forecasts. HP shares rose 2.8% after falling earlier. EDS was up more than 1% on the day.
Wal-Mart (WMT, Fortune 500), the world's largest retailer, reported higher quarterly sales and earnings that topped estimates. However, the company issued second-quarter earnings guidance that is at or below current forecasts. The stock fell 2.3%Tuesday.
Yahoo (YHOO, Fortune 500) posted a big gain Tuesday after CNBC reported activist investor Carl Icahn is mulling a Yahoo proxy fight. CNBC reported, Icahn began building a significant position in Yahoo late last week, and may be able to win some board seats and strike a deal with Microsoft (MSFT, Fortune 500). Shares of Yahoo jumped 5.1% Tuesday and about another 1% in early after-hours trading.
Among other movers, big financial stocks fell, including American Express (AXP, Fortune 500), JP Morgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500).
Bank of America said at an investor conference that its customers are feeling significant economic pressure and that the credit environment remains difficult, according to published reports.
Market breadth was positive, with winners even with losers on the New York Stock Exchange with a volume of 1.2 billion. Advancers just edged out decliners on the Nasdaq with a volume of 1.9 billion.
Commodities: U.S. light crude oil for June delivery briefly hit a record trading high of $126.98 a barrel on the New York Mercantile Exchange on reports that Iran is planning to cut oil production.
But oil prices trimmed gains after the Senate voted for a temporary halt in filling the Strategic Petroleum Reserve, a move - opposed by President Bush - that advocates say could help temper gas prices.
Oil prices settled up $1.57 at $125.80 per barrel.
The national average price for a gallon of regular unleaded gas rose to a record $3.732 from $3.718 the previous day, according to AAA. It was the sixth record in a row.
COMEX gold for June delivery slumped $15.30 to settle at $869.60 an ounce.
Economic news: The morning brought reports on retail sales, business inventories and home prices.
Total retail sales fell 0.2% in April, as expected, after rising 0.2% in March, because of weak auto sales. But sales excluding autos rose 0.5%, topping forecasts for a rise of 0.2% and following an increase of 0.4% in March. (Full story).
March business inventories rose 0.1% versus an 0.5% increase in the previous month, the government reported. Economists thought inventories would rise 0.4%, on average.
Single-family home prices fell 7.7% in the first quarter, the National Association of Realtors reported. it was the biggest first-quarter decline in more than 25 years. (Full story).
Fed on market turmoil: Federal Reserve Chairman Ben Bernanke said Tuesday that the financial markets have improved following central bank actions over the last 8 months, but that the environment is still far from normal.
Both Kansas City Fed President Hoenig and Dallas Fed President Fisher said Tuesday inflation is still too high. San Francisco President Janet Yellen said inflation was on the "high side," but she expects it to moderate. (Full story).
Other markets: The dollar rose versus the euro and the yen on the Fed speeches.
Treasury prices slumped on the encouraging economic news, raising the yield on the benchmark 10-year note to 3.91% from 3.79% late Monday. Bond prices and yields move in opposite directions.
On tap for Wednesday: Wednesday, investors will an earnings report from government-backed mortgage financier Freddie Mac (FRE, Fortune 500). Wall Street analysts are expecting the company to report a loss of 92 cents per share after counterpart Fannie Mae (FNM, Fortune 500) posted worse-than-expected earnings last week.
Investors will also get a look at a key measure of inflation before the bell Wednesday. April's Consumer Price Index is expected to rise 0.3% along with Core CPI that is expected to rise 0.2%, according to consensus estimates compiled by Briefing.com. 
