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Dow Struggles; IBM, Goldman Shares Skid

The Dow struggled to stay in positive territory Tuesday as IBM and Goldman Sachs fell despite solid earnings reports from both companies.

Goldman posted earnings of $5.59 a share, well ahead of analyst estimates of $4.01. Still, Goldman shares slipped, nearly erasing all of Monday's 1.6-percent gain, as investors remained tentative on the company's legal woes.

Doubts started to creep in about the strength of the SEC's case against Goldman but the Wall Street titan's problems aren't over yet. The UK financial watchdog, the Financial Services Authority (FSA), said it will launch a formal inquiry into trading practices at Goldman's London office.

"Earnings are going to overshadow their legal battle for at least a couple of hours," James Hughes, market analyst from CMC Markets, told CNBC, but added: "[E]veryone is a little bit cautious."

Overall bank stocks were mixed, with Bank of America and Citigroup higher.

Two brokerages raised their price targets on Citi — one to $4.75 and the other to $5.

Elsewhere in earnings, Coca-Cola topped expectations but fell short in revenue.

UnitedHealth Group rose after the health insurer blew past forecasts and raised its forecast. Wedbush Morgan initiated coverage of the stock with a "neutral" rating and $35 price target.

Johnson & Johnson also exceeded forecasts for the current quarter but the consumer-products maker slashed its full-year outlookamid weakness in U.S. sales.

IBM was the biggest percentage decliner on the Dow after the tech giant reported stronger-than-expected resultsand raised its outlook but shares fell as traders sold the news. Some also said margins were slightly disappointing.

Still, a slew of brokerages raised their price targets on IBM stock — anywhere from $135 to $167.

After the bell, reports are due out from Apple and Yahoo .

Luxury-goods maker Coach and motorcycle powerhouse Harley-Davidson also beat expectations.

Harley was actually the biggest percentage gainer on the S&P 500, up more than 7 percent.

Monday saw a late-day comeback with the Dow and the S&P 500 posting gains for the session.

European shares were higher today , but pared gains after the FSA announced its Goldman inquiry. Large parts of European airspace remain closed, but some countries have eased restrictions. Asian stocks closed mostly higher in the wake of a positive U.S. close.

Procter & Gamble raised its quarterly dividend 9.5 percent to 48 cents a share.

Meanwhile, drugmaker Novartis said it is cutting about 20 percent of its U.S. headquarters staff, a total of 383 jobs.

And on the M&A front, CKE Restaurantsreceived a $12.55-per-share takeover bid from Western Acquisition Holdings and said it will terminate a previous merger agreement with Thomas H. Lee Partners.

No economic numbers are set for release Tuesday. But Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner will appear before the House Financial Services Committee Tuesday morning to talk about the circumstances surrounding the failure of Lehman Brothers.

Details of their testimony were released Monday, so any news would come from the Q&A sessions that follow.

This Week:

TUESDAY: Citigroup shareholders meeting; Earnings from Apple & Yahoo after the bell
WEDNESDAY: Weekly mortgage apps; weekly crude inventories; Earnings from AT&T, Boeing, McDonald's, Morgan Stanley, United Technologies, Wells Fargo, Altria, eBay, Starbucks, Qualcomm & Sandisks
THURSDAY: PPI; weekly jobless claims; existing-home sales; Earnings from Pepsi, Verizon, Fifth Third, PNC Bank, American Express, Microsoft & Capital One
FRIDAY: Durable-goods orders; new-home sales; Earnings from Travelers, Honeywell, Schlumberger & Xerox

Send comments to cindy.perman@nbcuni.com.