Stocks End Mixed After Early Advance

Stocks gave up a healthy early advance and closed mixed Tuesday, as investors disregarded another encouraging economic report and better-than-expected earnings from companies including Lockheed Martin and R.J. Reynolds Tobacco Holdings.

Prices of U.S. Treasuries gained on fear of fallout from explosions in Syria and more combat in Iraq, dropping yields on the benchmark 10-year note to 4.39%, from 4.43% on Monday. Bond yields and prices move in opposite directions. The dollar fell against the euro but rose against the yen.

Crude oil was up on worries over possible supply disruptions because of the Middle East conflicts.

On Wall Street, analysts said the market couldn’t decide whether to buy on the improving business climate or sell on the increasing likelihood of higher rates.

“We’re seeing robust earnings and, in a lot of cases, positive surprises in earnings,” said Peter Wall, chief investment officer at Chase Personal Financial Services. “But it still seems to be a dilemma for the market to focus on earnings or interest rates.”

The Dow Jones industrial average closed up 33.43 points, or 0.3%, to 10,478.16, after gaining more than 90 points earlier in the session.

Broader stock indicators were mixed. The Standard & Poor’s 500 index advanced 2.58 points, or 0.2%, to 1,138.11, while the Nasdaq composite index slipped 4.24 points, or 0.2%, to 2,032.53.

The erratic session followed two weeks of declines over interest rates. With the economy improving, many on Wall Street are nervous that the Federal Reserve will move up its timeline for raising rates. Higher interest rates would make it more costly for companies to borrow money and could thus slow the business expansion.

There were more indications Tuesday that the economic rebound continues. The Conference Board’s consumer confidence index rose to 92.9 from a revised 88.5 in March. The reading was better than the 88.5 that analysts had forecast.

Also, the National Assn. of Realtors reported that existing-home sales rose 5.7% in March to a seasonally adjusted annual rate of 6.48 million -- second only to the all-time monthly high rate of 6.68 million registered in September 2003.

The economic reports didn’t trigger any immediate selling, unlike other upbeat data over the last two weeks. Some analysts said the lack of a sharp sell-off suggested the market’s mood was improving.

“We’ve had a few trading sessions for profit-takers to take profits off the tables, and we’ve alleviated to some extent some of the valuation concerns we had a month ago because earnings have come in very strong in the first quarter,” said Kevin Caron, a market strategist with Ryan, Beck & Co. “When you combine that with the consumer confidence numbers, this suggests to me this is a strong market.”

That’s not to say interest rate jitters have disappeared.

“I expect that after the market has run up and there’s a good economic data release, investors will ... pull back,” said Wall, the Chase Personal Financial Services analyst. “Longer-term, though, I expect the market will realize that interest rates going up is not going to have as severe an impact on the economy going forward.”

Better-than-expected results helped R.J. Reynolds, the No. 2 cigarette maker and manufacturer of the Camel, Winston and Doral brands, surge $2.64, or 4.5%, to $61.82.

Lockheed Martin rose 38 cents, or 0.8%, to $46.88 on quarterly results that beat expectations.

Shares of Transocean, the world’s largest offshore oil and natural-gas driller, jumped $1.61, to $29.12, after the company said first-quarter net income was 7 cents a share and profit excluding some costs was 15 cents a share. According to a Thomson First Call survey, the average analyst estimate was for earnings of 3 cents a share.

But investors were selective. Verizon Communications fell 24 cents, to $37.50, after a sharp drop in earnings. And U.S. Steel shares tumbled $2.12, to $33.38, after the company’s chief executive resigned, overshadowing an encouraging earnings report.

Advancing issues led decliners nearly 5 to 4 on the New York Stock Exchange.

Market Roundup, C7