NEW YORK Wall Street turned in a mixed performance Tuesday after a fresh report on retail sales and a new oil price record told investors the same old story: The economy is hurting and costs are rising, but things could be worse.
The Commerce Department's latest report showed that retail sales fell by 0.2 percent in April, as expected. The data did show better-than-expected sales if automobiles are excluded, but indicated Americans are reluctant to make big-ticket purchases especially as soaring fuel prices cut into demand.
"The numbers are coming out weak, but the economy's not falling apart," said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. "On balance, they were negative, but you'd expect them to be."
Oil prices, meanwhile, spiked to a trading record of $126.98 a barrel on the New York Mercantile Exchange after Iranian news services reported Iran is considering a cut to output. They later settled up $1.57 at $125.80.
Tuesday's wavering trading in the stock market reflected its ongoing uncertainty about the economy. Brian Gendreau, investment strategist for ING Investment Management, believes investors won't get a clear picture until more data is released in June and July.
"We're going to go through a period where the markets are going to focus on the macro-data, and any adverse piece of news about the credit markets," he said. "It will be a trendless market until the uncertainties about a contraction in economic activity are resolved."
According to Federal Reserve Chairman Ben Bernanke, turmoil in financial markets has eased somewhat. He noted during his speech in Atlanta that the markets for certain mortgage-backed securities, such as those backed by Fannie Mae and Freddie Mac, as well as some fixed-rate mortgages and corporate debt have improved. He did say, though, that the situation remains "far from normal."
According to preliminary calculations, the Dow Jones industrial average fell 44.13, or 0.34 percent, to 12,832.18, having soared 130 points on Monday.
Broader indexes closed mixed. The Standard & Poor's 500 index fell 0.54, or 0.04 percent, to 1,403.04, and the Nasdaq composite index rose 6.63, or 0.27 percent, to 2,495.12.
The technology-heavy Nasdaq got a boost as Yahoo Inc. rose after CNBC reported billionaire investor Carl Icahn was considering a proxy fight to try to push Yahoo back into merger discussions with Microsoft Corp.
Yahoo rose $1.30, or 5.2 percent, to $26.56.
Government bond prices fell as the Treasury market focused on the better-than-expected details in the retail sales report. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.90 percent from 3.80 percent late Monday.
The Commerce Department also reported that businesses added to their inventories in March by the smallest amount in a year. Inventories edged up a tiny 0.1 percent in March, the smallest advance since they were basically flat in March 2007.
In corporate news, investors examined a number of high-profile acquisitions, including Hewlett-Packard Co.'s offer to buy Electronic Data Systems Corp. for $12.6 billion. The deal to combine Hewlett-Packard with EDS will create the second-largest technology services provider behind International Business Machines Corp.
EDS shares added 26 cents to $24.34, while Hewlett-Packard fell $2.56, or 5.5 percent, to $44.27.
Staples Inc. raised its hostile bid to acquire Dutch rival Corporate Express NL.
Staples rose 48 cents, or 2.2 percent, to $22.44 after the office supply retailer sweetened its offer price by 10 percent. Corporate Express said it is willing to consider the deal.
And investors got another read on the consumer after Wal-Mart Stores Inc., the world's largest retailers, reported first-quarter profit above Wall Street predictions but also forecasted that the current quarter will come in below expectations.
Wal-Mart fell $1.37, or 2.4 percent, to $56.65.
Luxury home builder Toll Brothers Inc. said its preliminary results show homebuilding revenue fell 30 percent in its fiscal second quarter amid a weak spring selling season. The company also expects to continue to face "challenging times" ahead, given soft conditions in most markets. Shares shed 10 cents to $22.97.
The Russell 2000 index of smaller companies rose 3.62, or 0.49 percent, to 736.85.
Advacing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange, where volume came to 1.21 billion shares.Overseas, Japan's Nikkei stock average fell 1.53 percent. Britain's FTSE 100 slid 0.14 percent, Germany's DAX index rose 0.34 percent, and France's CAC-40 rose 0.45 percent.