Stocks Post Modest Advance in Session

Stocks rallied moderately Tuesday after trading lower for most of the day, as some investors began to look for bargains.

But Yahoo’s earnings report after the close threatened to pull the plug on a turnaround for technology stocks.

Also, traders are bracing today for Federal Reserve Chairman Ben S. Bernanke’s testimony on Capitol Hill, where he is expected to provide more guidance about the Fed’s 2-year-old credit-tightening campaign and on whether it is nearing an end.

The market fell initially Tuesday after retailer Target lowered its sales forecast for July, heightening concerns that rising energy prices are hurting consumer spending, a key factor for corporate profits.

But the market picked up in the final two hours of trading. The Dow Jones industrial closed up 51.87 points, or 0.5%, to 10,799.23.

The tech-dominated Nasdaq composite index gained 5.50 points, or 0.3%, to 2,043.22.

Falling oil prices may have helped sentiment. Near-term crude futures in New York dropped $1.76 to $73.54, after losing $1.73 on Monday, as concerns about Middle East tensions abated somewhat.

Oil had surged to record highs last week as violence flared between Israel and Hezbollah militants in Lebanon. The jump in prices hammered Wall Street, driving the Dow down 3.2% for the week.

Tuesday, “With oil coming off -- that probably helped the market get some support,” said Sam Rahman, portfolio manager at Baring Asset Management in Boston.

“Investors are seeing that things will not get really bad and that was supporting markets toward the end of the session,” he said.

Rising stocks outnumbered losers by narrow margins on the New York Stock Exchange and on Nasdaq.

The Standard & Poor’s 500 index inched up 2.37 points, or 0.2%, to 1,236.86, its first gain after four consecutive losses.

The Russell 2,000 small-stock index rose 0.6%.

Better-than-expected earnings from Coca-Cola and United Technologies propped up the Dow index, analysts said. Coke shares rose 85 cents to $43.55 and United Technologies jumped 92 cents to $58.88.

“Earnings are going to continue to grow, albeit at a slower rate,” said William Frels, who helps manage about $4 billion at Mairs & Power Inc. in St. Paul, Minn. “If energy prices show some signs of topping out, then the outlook for stocks improves.”

Stocks may have benefited as money came out of bonds after the government said producer prices rose 0.5% in June, which was above expectations.

That set the scene for Bernanke’s testimony today. He is expected to be asked about the Fed’s inflation outlook and the health of the economy, among other issues.

The 10-year Treasury note yield jumped to 5.13% from 5.06% on Monday.

The tech stock sector could be in for another rough ride. After the close of regular trading Internet giant Yahoo reported second-quarter sales below expectations.

The stock, up 40 cents to $32.24 in regular trading, plummeted to $27.80 after hours.

Among the day’s market highlights:

* An index of retail stocks fell 2%, for the worst performance among 24 industry groups in the S&P; 500, after Target said July sales would be slower than expected. Target shares fell $2.02 to $45.53, J.C. Penney slumped $2.29 to $63.37 and Sears Holding lost $1.35 to $140.30.

But Wal-Mart added 15 cents to $43.17.

* Home builders’ shares, among the biggest losers this year, slid further. KB Home fell 31 cents to $39.04 and Centex dropped 97 cents to $44.24.

* Sanmina-SCI had the biggest drop in the S&P; 500, falling 49 cents, or 11%, to $3.78. The world’s second-largest maker of electronics for other companies said earnings, excluding some items, were 6 cents to 7 cents a share in the fiscal third quarter as profitability in its computing business declined. It had forecast profit of 8 cents to 10 cents.

* Mattel continued to rise after its surprisingly strong earnings report Monday. The stock gained 22 cents to $17.82. Harley-Davidson also advanced on earnings news, rising $1.04 to $53.35.

But Johnson & Johnson fell 31 cents to $60.60 on its quarterly report.

* Gold tumbled for a second day as oil prices retreated. Near-term gold futures in New York dropped $22.30 to $628.30 an ounce.

Among gold mining stocks, Glamis Gold fell $1.04 to $34.58 and Barrick Gold was off 42 cents to $29.05.

* Japan’s market fell for a fifth straight session to a one-month low, with the Nikkei stock index sinking 408 points, or 2.8%, to 14,437 amid concerns about the Middle East.

But Mexican stocks rallied for a second straight day, after six consecutive losses. The IPC index jumped 2.4% to 18,885.67.