Stocks Falter Despite Strong Goldman Results

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP

Stocks wavered Tuesday morning even as Goldman Sachs Group beat the most optimistic estimate of its second-quarter results and as retail sales results also surpassed estimates.

The Dow Jones Industrial Average fell 17 points to 8313, the S&P 500 slipped 1 point to 899, and the Nasdaq Composite lost 8 to 1787. Stocks had opened flat and edged higher shortly after the bell.

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Goldman Sachs shares was off 0.1% to $149.31 even though the bank's profit smashed through analyst estimates, with its fixed income, currency and commodities unit posting record quarterly revenue. Goldman posted income of $3.44 billion, or $4.93 a share, up from $2.09 billion, or $4.58 a share, a year earlier. The latest results included a $426 million dividend related to the company's paying back its TARP funds. Excluding that, earnings were $5.71 a share, which beat analyst estimates by more than $2 a share. Net revenue jumped 46% to $13.76 billion.

But many in the market had expected Goldman to post a strong quarter, and in fact stock futures moved off their best levels of the day after the bank's results in premarket trade.

Besides Goldman, Johnson & Johnson reiterated its 2009 view, and after the close, Intel results are due. J&J shares rose 0.9%.

Earnings season is under particular scrutiny this time around for whether there will be signs of the economy bottoming.

Speaking in Saudi Arabia, U.S. Treasury Secretary Timothy Geithner said "it seems realistic to expect a gradual recovery, with more than the usual ups and downs and temporary reversals."

Railroad operator CSX said there were signs of a bottom in many of its markets as it reported a 20% profit drop.

On the data front, U.S. retail sales rose a better-than-expected 0.6% in June, the best gain in five months, the Commerce Department estimated Tuesday. Strong auto and gasoline sales offset weakness in many sectors. The consensus forecast of Wall Street economists was for retail sales to rise 0.5%.

Producer prices rose a stronger-than-forecast 1.8% in June, the largest increase since November 2007.

Among stocks to watch, CIT Group is in advanced talks with the government on getting aid. Dell dropped 6.5% after warning of a modest decline in second-quarter margins, citing higher component costs, a competitive pricing environment and an unfavorable mix.

Asian shares ended higher Tuesday after strong overnight gains on Wall Street, with commodity stocks buoyed by a bounce in metal and oil prices. Japan's Nikkei 225 Average rose 2.3% to 9261.81 to snap a nine-session losing streak.

Europe stocks rose for a second day, with London's FTSE adding 0.8%.

Oil futures were back above $60, while the dollar held to a close range against rivals.

Bonds dropped in value, with yields on 10-year Treasury bonds rising to 3.426%.