The Dow pulled back Tuesday as Fed Chairman Ben Bernanke's testimony on Capitol Hill overshadowed enthusiasm for earnings beats.
The Dow had shot out of the gate this morning, after beats from several components, but pockets of weakness quickly began to emerge, including chips, hardware, banks and retail. The Nasdaq turned lower before both the Dow and S&P.
In his semi-annual testimony before the House, Bernanke repeated the Fed's projection that the economy will start growing again in the second half but cautioned that it would be modest growth and unemployment would continue to rise. He also said the Fed is working on an exit strategy to avoid having its stimulus measures cause a spike in inflation.
"The [Fed] has been devoting considerable attention to issues relating to its exit strategy, and we are confident that we have the necessary tools to implement that strategy when appropriate," he said, echoing comments he made in an op-ed in Tuesday's Wall Street Journal.
- Watch a live streaming video of Bernanke's testimony
Bernanke will repeat his testimony tomorrow morning before the Senate.
Caterpillar was the biggest market mover, with shares jumping nearly 10 percent after the contruction-equipment manufacturer beat earnings expectations and raised its outlook.
A slew of other Dow components also beat, including Merck , Coca-Cola and DuPont.
The anomaly today: United Technologies narrowly beat expectations but lowered its full-year outlook.
Texas Instruments followed in Intel's footsteps, topping earnings expectations when it reported after the bell Monday.
After the bell today, reports are due out from Apple , Advanced Micro Devices , Starbucks and Yahoo .
CIT Group tumbled more than 15 percent after the lender said it may have to seek bankruptcy if enough notes aren't tendered by its deadline. The stock had more than tripled since touching an all-time low of 31 cents a share last Thursday amid buzz that it had had reached an agreement for emergency funding from bondholders. CIT formally announced the agreement Monday evening.
Tech stocks retreated after their recent run — the Nasdaq registered its ninth consecutive winning session Monday, its first such streak since July 8-20 of 1998.
Even Apple was lower ahead of its earnings tonight, which are expected to dazzle once again. CNBC's Jim Goldman will be live-blogging the conference call, which is slated to start at 2 pm PT/5 pm ET, on his Tech Check blog.
On Monday, the Dow Jones Industrial Averagegained 104.21, or 1.2 percent, to close at 8,848.15, its sixth straight gain. The S&P 500rose 1.1 percent to 951.13, an eight-month high.
— Peter Schacknow, CNBC Senior Producer, contributed to this report
Still to Come:
It's a jam-packed week of earnings, with about a third of the S&P — and half the Dow — reporting.
TUESDAY: Earnings from Apple, Yahoo, AMD and Starbucks after the bell
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Earnings from Boeing, Glaxo, Morgan Stanley, Pepsi, Pfizer, Wells Fargo, Bank of NY Mellon; Delta; KeyCorp; SunTrust, US Bancorp, Qualcomm, eBay and Sandisk
THURSDAY: Weekly jobless claims; existing-home sales; Earnings from AT&T, Bristol-Myers Squibb, Ford, MMM, CIT Group, Fifth Third, PNC Financial, UPS, Xerox, Amazon, AmEx, Microsoft, Broadcom and Capital One
FRIDAY: Earnings from Ericsson, Ingersoll-Rand, Schlumberger; Red Hat replaces CIT in S&P 500 after the closing bell
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