You know what they say: Here today, gone ... today.
The Dow Jones Industrial Average closed down 11 points Tuesday. The index's triple-digit intraday gain evaporated within a half hour after oil closed above $100 a barrelfor the first time Tuesday.
The Nasdaq and S&P also finished modestly lower.
"I think what you have going on is a tug of war between the people who think we're going to have a really deep recession and people who think we're going to have a more shallow slowdown," said Chris Orndorff, head of equities strategy at Los Angeles money manager Payden & Rygel. The market is not only chasing data points on a day-to-day basis, Orndorff said, but also on an intraday basis.
U.S. crude-oil futures settled at a record $100.01 a barrel following a Texas refinery fire on Monday and concerns about supply disruptions from Venezuela, Nigeria and Russia. Plus, it's widely expected that OPEC will cut production at its March meeting.
"We're concerned that we haven't yet seen the worst," Stuart Schweitzer, a global markets strategist at J.P. Morgan Private Bank, told CNBC. "If energy is gonna go higher in price, it's gonna hurt the consumer and it's gonna hurt the market overall."
The oil surge helped propel Exxon Mobil to one of the top spots on the Dow.
Chevron , which was added to the Dow today along with Bank of America , made a strong debut thanks to oil prices. (Altria and Honeywell were dropped from the blue-chip index.)
AIG the Dow's top gainer, shot up after an article in Barron'scalled the insurance giant's stock a "screaming buy."
Shares of Hewlett-Packard advanced ahead of the computer and printer maker's earnings. After the closing bell, H-P reported its net jumped 38 percent to $2.13 billion, or 80 cents a share, in the quarter ended Jan. 31. Excluding items, H-P earned 86 cents a share, surpassing the 81 cents a share analysts had expected. The Palo Alto, Calif., company also raised its fiscal 2008 forecast.
The earlier rally was fueled in part by a better-than-expected housing report and Wal-Mart's earnings.
Home-builder sentiment rose unexpectedly in February, with the NAHB/Wells Fargo Housing Market index climbing to 20 from 19 in January. In December, that gauge had fallen to 18, its lowest level since the survey began in 1985. Economists had expected a flat reading. Still, the index has a long way to go to get back to its peak of 72, set in 2005. A gauge of building activity in the next six months slipped.
Wal-Mart reported its net income rose 4 percent to $4.1 billion, or $1.02 a share, in the fiscal fourth quarter ended Jan. 31. Excluding charges for dropped real-estate projects and restructuring, the world's largest retailer earned $1.04 a share, beating analysts' expectations by two cents a share. Revenue increased 8.3 percent to $106.27 billion.
"The death of the consumer has been greatly exaggerated," Jack Bouroudjian, a principal at Brewer Investment Group, told "Squawk Box" after Wal-Mart's report. Still, Wal-Mart warned that consumers are becoming more cautious and said its earnings in the current quarter would fall short of estimates.
Also offering the market some early incentive were comments from Federal Reserve and Treasury officials. Treasury Secretary Henry Paulson told CNBC credit markets are making progress and that a wider government bailout is "absolutely not" necessary. (Watch a clip of the interview.) Minneapolis Fed President Gary Stern, who said the central bank's interest-rate cuts are appropriate to restore stability to the financial markets and prevent further damage to the economy.
U.S. Steel rose after UBS upgraded its rating on the steelmaker's stock to "buy" from "neutral," citing soaring iron-ore prices, which are up about 65 percent from a year earlier.
Martha Stewart Living Omnimedia shares gained more than 17 percent following news that the domestic empire is buying Emeril Lagasse's TV shows, cookbooks and kitchen products -- everything but the restaurant chain and corporate offices -- for $45 million in cash and $5 million in stock. Separately, MSO also bought a 40 percent stake in WeddingWire.com for an undisclosed sum. Earlier, MSO reported its profit doubled but missed Wall Street estimates by two cents a share.
Investors continue to look skyward for a merger. Delta Air Lines purchase of Northwest Airlines was moving closer to completion, the New York Times reported Tuesday. The boards of both companies have emergency meetings scheduled for today. A deal is expected to be announced on Thursday.
In other deal news, Microsoft is prepared to authorize a proxy fight for Yahoo, people familiar with the situation told DealBook. In an interview Monday with Reuters, Bill Gates said that Microsoft won't raise its $31-a-share bid for Yahoo.
MBIA announced that former CEO Joseph "Jay" Brown is returning to the company's helm. Brown said he is optimistic that a deal involving New York state insurance regulators aimed at resolving the bond insurer's financial woes could be reached within the next two weeks.
In Europe Tuesday, banks rattled markets with news of more write-downs. Credit Suisse announced an unexpected $2.85 billion write-down and said it found pricing errors on its books. British bank Barclays raised the value of its 2007 write-downs to 1.6 billion pounds ($3.1 billion), but Barclays President Bob Diamond told CNBC Europe that the bank's profit was in line with expectations and that risks are under control.
Shares of Lehman Brothers skidded following a Wall Street Journal report that suggested the bank could face a write-down of about $1.3 billion in its rockiest quarter yet.
Medical device maker Medtronic met analyst estimates even though it said quarterly profit fell to 7 cents a share because of its acquisition of Kyphon.
Office Max, meanwhile, soared past analysts' expectations, posting a quarterly profit excluding items of 65 cents a share, compared to analyst expectations of 52 cents.
|Wed: CPI, Housing starts, Fed minutes|
|Thu: Jobless claims, Philly Fed report, J.C. Penney earnings|
|Wild Card: Delta-Northwest merger may be announced|
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