U.S. stocks pared earlier gains during the final hour of trading Tuesday, finishing the day barely changed.
Earlier, stocks were modestly higher as investors welcomed encouraging data on the U.S. economy and from the eurozone, but that enthusiasm faded as the session wore on.
On Tuesday, the Dow Jones industrial average finished up about 3 points, while the S&P 500 lost less than 1 point. The Nasdaq declined 6 points, or 0.2%, dragged down by losses in Green Mountain Coffee Roasters (GMCR) and Research in Motion (RIMM).
Investors were initially heartened after a government report showed that U.S. retail sales rose for the first time in four months in July, a sign that the economy may have started strengthening in the middle of the summer.
"We saw strength in retail sales across the board last month, and that indicates that the underlying trend we saw in consumer spending last quarter may actually be stronger," said Michael Sheldon, chief market strategist at RDM Financial Group.
That bodes well for the broader economy since consumer spending historically accounts for two-thirds of U.S. economic activity, he said.
The positive data comes just before the key back-to-school shopping season for retailers.
Meanwhile, France and Germany released second-quarter gross domestic product figures that beat analysts' expectations, but preliminary data showed the eurozone economy on the whole continued to shrink.
Eurozone GDP shrank by 0.2% between April and June compared to the previous quarter and 0.4% year-over-year, according to flash estimates published by Eurostat, the statistical office of the European Union. In the first quarter of 2012, GDP was unchanged.
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"Today's GDP data reinforces the fact that there are two different parts of Europe from an economic perspective," said Sheldon. "Economic activity in the north continues to muddle along at a neutral to slightly positive rate, while the southern part of Europe remains mired in a recession."
With more signs of a persistent slowdown, investors are hopeful that the figures will continue to build a case for central banks to step in with further stimulus measures.
Still, trading volume remains very low, and many investors aren't placing any significant bets as the market slips into the usual summer doldrums. That could make it tougher to gauge if the recent rally is for real until September.
World Markets: European stocks got a boost as the eurozone GDP figures fueled hopes for stimulus. Britain's FTSE 100 closed up 0.6%, the DAX in Germany ticked up 0.9% and France's CAC 40 added 0.7%.
Inflation in Britain edged higher in July, according to the Office for National Statistics. Consumer prices rose at a 2.6% annual rate, up from 2.4% in June, while retail prices rose at a 3.2% rate, up from 2.8%.
Asian markets ended the day higher. The Shanghai Composite rose 0.3%, the Hang Seng in Hong Kong gained 1.1%, and Japan's Nikkei added 0.5%.
Economy: Retail sales were up 0.8% in July, the Census Bureau reported Tuesday. Economists had expected a 0.2% increase.
Producer prices also beat estimates, increasing 0.3%, according to the Bureau of Labor Statistics. Prices were expected to rise by 0.2%.
Business inventories rose 0.1% in June, slightly slower than the 0.2% rise were looking for.
Companies: Home Depot (HD) shares rose sharply, making it the best performer among the Dow's 30 components. The home-improvement retailer's second-quarter earnings topped expectations, though revenue fell short of estimates.
Estee Lauder (EL) shares shot up 9%, making them among top gainers in the S&P 500. The cosmetics maker reported better-than-expected quarterly results.
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Shares of Saks (SKS) were also higher on strong earnings.
Michael Kors (KORS) shares jumped after the luxury retailer posted earnings that tripled from a year earlier, trouncing forecasts.
TJX (TJX)shares edged higher after the retailer beat earnings expectations by a penny.
Groupon (GRPN) shares dove after the local deals provider beat earnings estimates but missed on revenue.
Shares of Google (GOOG) rose above $670 a piece to the highest level since January 2008. Shares of Apple (AAPL) also edged higher, and are now less than 1% away from their all-time-high.
U.K. bank Standard Chartered said it will pay $340 million to settle New York State allegations of money laundering for Iran.
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Currencies and commodities: The dollar rose against the euro, the British pound and the Japanese yen.
Oil for September delivery added 70 cents to settle at $93.43 a barrel.
Gold futures for December delivery fell $10.20 to settle at $1,6102.40 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell slightly, pushing the yield up to 1.74% from 1.65% late Monday.
