Oil Buoys Stocks but Techs Drag

Stocks advanced, buoyed by a sharp drop in oil prices, but technology stocks dragged on the market after disappointing earnings from Apple and Texas Instruments.

"There’s an extremely high level of gloom and doom," Al Goldman, chief market strategist at Wachovia Securities, said on CNBC. But "last time I checked, they don’t ring a bell at the bottom -- we should be doing some selective buying," Goldman advised.

Goldman says commodities have been the market darling for nearly five years now and that dance is over and it's time to find a new partner.

"I want to stay away from most commodities such as gold and I want to buy basic Americana stocks when nobody else wants them," Goldman said.

Oil pulled backmore than $4 a barrel, trading between $126 and $127 a barrel as concerns subsided about a tropical storm heading toward the Gulf of Mexico.

Shares of Apple came under pressure after the computer and iPod maker exceeded the consensus earnings target but warned that current-quarter earnings would miss analysts' expectations.

Shares of Texas Instruments also took a hit after it missed profit forecasts due to weakness in sales of cell-phone chips.

American Express delivered a doozy after the closing bell Monday: The credit-card provider posted earnings well below forecasts and warned it will no longer be able to deliver its projected earnings growth of 4 to 6 percent this year because of the economy.

"While we have been able to generate substantial earnings and returns relative to many in the financial sector, we do not expect to meet or exceed our long-term financial targets until we see improvements in the economy,'' Kenneth Cheanult, American Express's chairman and chief executive, said in a statement.

What investors were even more nervous about was AmEx's revelation that even some wealthy consumers are having a hard time paying their bills.

Offering some cause for optimism, UPS , which is widely seen as a gauge of the economy for the breadth of businesses its packages reach, hit its earnings target despite the drag of fuel prices and said it expects "modestly better results"in the second half.

It was just the opposite in the banking sector.

After a string of encouraging results from banks, Wachovia cut the party short, reporting an $8.86 billion second-quarter lossthat was even worse than analyst estimates, and said it was cutting its dividend for the second time this year.

However, SunTrust Bank beat expectations. The bank said it earned 78 cents a share in the second quarter, excluding one-time items, ahead of 64 cents a share the market expected.

SunTrust also said it sold 10 million shares of Coca-Cola to improve its ability to cover losses. Coke shares edged higher.

Bank of America was the biggest gainer on the Dow after the bank on Monday became the fourth in a string of banks to surpass forecasts.

Citigroup, Wells Fargo and JPMorgan are the other three, who topped expectations when they reported last week.

Strong earnings from Dow components Caterpillar and Dupont helped prop up the Dow. Both companies blew past forecasts; Caterpillar got a boost from foreign demand and DuPont benefitted from demand for corn and soybean seeds.

Merck was once again the biggest decliner on the Dow, adding another 10-percent decline onto its more than 6-percent drop Tuesday. Traders pummeled the stock after the drug maker said a study showed Vytorin, its cholesterol-busting franchise with Schering-Plough, missed the mark on its primary and one of its secondary goals. Patients given Vytorin showed "no significant difference" than those given the placebo, Merck said.

Schering-Plough shares, meanwhile, rebounded after sliding 12 percent in the prior session.

European markets also struggled on weak tech results and fell more than 1 percent.

London's FTSE-100 lost more than 1 percent as component Vodafone tumbled more than 14 percent after lowering revenue guidance.

Handset maker Ericsson also struggled, losing more than 8 percent after indicating that costs would rise.

"The credit crunch really has impacted the wider economy … and we're seeing that with tech stocks as well," Joshua Raymond of City Index told "Worldwide Exchange."

Asian shares were mostly lower, but Tokyo bucked the trend, climbing nearly 3 percent on the back of strength in financial stocks.

This Week:

TUESDAY: Earnings from Yahoo and WaMu
WEDNESDAY: Weekly mortgage applications; weekly oil inventories; Earnings from AT&T, Boeing, ConocoPhillips, Pfizer, Philip Morris, Anheuser-Busch, Amazon and Pulte Home
THURSDAY: Weekly jobless claims; existing-home sales; earnings from Eli Lilly, MMM, Bristol-Myers, Dow Chemical and Xerox
FRIDAY:Durable-goods orders; consumer sentiment; new-home sales; earnings from Netflix

Send comments to cindy.perman@nbcuni.com.