Stocks pared gains Tuesday after a slew of earnings reports that were largely positive a day after the markets took a thrashing following Standard & Poor's revision of its outlook for U.S. debt.
The Dow Jones Industrial Average slipped to a gain of about 10 points after rising more than 40 earlier, following a day when theblue-chip index sank 140 points.
Among Dow components Johnson & Johnson, Chevron and Caterpillar rose, while Bank of America and Travelers fell.
The S&P 500 traded flat, while the Nasdaq slipped. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
Among key S&P 500 sectors, materials and energy rose, while consumerdiscretionary and financials fell.
While earnings season is still young, companies have been beating expectations about 75 percent of the time, which has been the case for the last several quarters.
What's different this time is there are fewer real surprises, and that's leading to a lackluster market, says Burt White, chief investment officer at LPL Financial.
"Companies are clearing the hurdle, but they are just clearing the hurdle, while others are clipping the jump," White said. But what people are looking for is "not mildly beating, but soundly beating."
Another trend is "consistent growers" in the consumer staples, health care, utilities, and telecom sectors are leading the market instead of the cyclicals, like materials and industrials, White said. That's because investors are concerned about austerity efforts in the U.S. and Europe and efforts by emerging countries like China to put the brakes on growth to curb inflation.
"This market is really worried about impact of austerity in half of the world, and the battle in the other half to slow inflation, " White said. "Both will be foots on the brake."
Johnson & Johnson, which is up nearly 3 percent Tuesday following a strong earnings report, is the kind of stable grower investors prefer in this kind of environment, he said.,
"I think we’re at very early stages of rotation in this market," White said. Investors are "looking for those companies that can be in charge of their own destiny."
In earnings, Goldman Sachssoundly beat expectations, with both sales and earnings in the first quarter coming in strong, but the bank's shares traded flat after the results received got a mixed review on Wall Street. Rochdale downgraded Goldman to "neutral" from "buy."