"Now that we're above $60 per barrel, if we hold above $60 a barrel, our expectation is that markets will not come in with that type of gain for this year. We'll probably be fortunate to have a 5 percent gain," he said. "If oil were to back down to the mid-$50s by year-end, I think the psychological impact of oil prices could lift and we could still attain that 10 percent. But it's going to take some mitigation in oil prices for that expectation to be realized."

However, Jenson said that the market's fundamentals appear solid. Corporate earnings have come in better than expected, and there has been upward movement in the major indices whenever energy prices have relented, he said.

"Right now, they're being held hostage, even in this low interest rate environment, because of what oil is doing," he said, "and probably will remain so at current prices."

Also Tuesday, the Federal Reserve reported that industrial production rose just 0.1 percent last month, the weakest showing in three months. Output increases at factories and utilities slowed after big gains in June, while mining output actually fell.

The overall increase was below what economists had been expecting, but they are still looking for solid gains for the rest of the year as factories boost production to restock depleted store inventories.

The report showed that output at utilities rose by 0.7 percent in July, following a giant 4.6 percent jump in June that reflected a return of hot weather that increased demand for electricity. Output at mines, a category that includes oil drilling, fell by 1.3 percent in July, the second decline in the past three months.

And in another report, the U.S. Commerce Department said construction starts on new homes and apartments fell a slight 0.1 percent in July, a possible sign that the red-hot housing market is beginning to cool off. The decline left housing construction at a seasonally adjusted annual rate of 2.042 million units last month.

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E-mail: jnii@desnews.com