Dow Off Earlier Lows as Oil Recedes

Stocks came off earlier lows as oil declined following a larger build in crude inventories than expected.

Crude oil dropped to around $121 a barrel after the EIA reported that crude inventories rose by 5.7 million barrels, more than four times what economists had expected.

Also boosting market optimism were better-than-expeted reports on home sales and worker productivity.

Existing-home sales fell just 1 percent between March and April, the National Association of Realtors reported. Of course, the year-over-year comparison was much more dramatic: Home sales were off 20 percent in April from a year earlier. Earlier, a separate report showed U.S. mortgage applications rose for the first time in three weeks.

Nonfarm productivity rose at a 2.2 percent annual rate in the first quarter, better than the 1.5 percent expected and the 1.8 percent logged in the fourth quarter of 2007. Labor costs grew at a 2.2 percent annual rate, the slowest pace in four years.

Cisco Systems after the bell Tuesday beat profit and sales forecastsbut shares slipped amidconcerns that orders have slowed.

Walt Disney also surpassed earnings expectations, reporting after the bell Tuesday that its profit rose 22 percent, helped by its film and theme park businesses.

In European earnings news, French energy group Total said its profit rose 9 percent as record oil prices helped offset weakness in oil and gas production. France Telecom reported its earnings rose 2.7 percent from a year earlier, in line with expectations.

A $14.6 Billion Mobile-Broadband Deal

Sprint and Clearwire announced a $14.6-billion joint venture to provide high-speed wireless Internet access for mobile phones and laptops.

The new company, to be named Clearwire, will receive a $3.2 billion investment from Intel , Google, Comcast, Time Warner Cableand Bright House Networks.

Financial markets look to be emerging from the credit crunch, Treasury Secretary Henry Paulson told the Wall Street Journal.

And the Federal Reserve is looking more closely at rising food and energy prices, Kansas City Fed President Thomas Hoenig said, according to Reuters. The could result in more focus from policy makers on the headline consumer price index (CPI), rather than the core CPI, which excludes food and energy prices when measuring inflation.

This Week:

WEDNESDAY: Consumer credit; Earnings from News Corp., Transocean
THURSDAY: Retail same-store sales; Jobless claims; Wholesale trade; Cablevision earnings
FRIDAY: Trade report

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