The stock market turned in a mixed performance Tuesday after a report on retail sales and a new oil price record told investors the same story: The economy is hurting and costs are rising, but things could be worse.
The Commerce Department's latest report showed that retail sales fell 0.2% in April, in line with analysts' expectations.
Although sales excluding automobiles were better than anticipated, the data indicate that Americans are reluctant to make big-ticket purchases -- especially as soaring fuel prices cut into demand.
"The numbers are coming out weak, but the economy's not falling apart," said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. "On balance, they were negative, but you'd expect them to be."
Oil prices, meanwhile, surged to an intraday record of $126.98 a barrel on the New York Mercantile Exchange after Iranian news services reported that Iran was considering cutting its output of crude. Oil finished up $1.57 at $125.80.
The mixed performance by the stock market reflected its continuing uncertainty about the economy. The picture is unlikely to be clarified until June or July, said Brian Gendreau, investment strategist for ING Investment Management.
According to Federal Reserve Chairman Ben S. Bernanke, turmoil in financial markets has eased somewhat. He noted in a speech in Atlanta that the markets for certain mortgage-backed securities, such as those issued by Fannie Mae and Freddie Mac, and for some corporate debt had improved. Bernanke did say, however, that the credit markets remained "far from normal."
The Dow Jones industrial average fell 44.13 points, or 0.3%, to 12,832.18, after jumping 130 points Monday.
The Standard & Poor's 500 index edged down 0.54 of a point to 1,403.04, while the Nasdaq composite index rose 6.63 points, or 0.3%, to 2,495.12.
The technology-heavy Nasdaq got a boost after CNBC reported that billionaire investor Carl Icahn was considering a proxy fight to try to push Yahoo back into merger discussions with Microsoft. Yahoo climbed $1.30, or 5.2%, to $26.56.
The Russell 2,000 index of smaller companies rose 3.62 points, or 0.5%, to 736.85.
Rising issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange.
Government bond yields rose as the Treasury market focused on the better-than-expected details in the retail sales report. The yield on the benchmark 10-year Treasury note rose to 3.92% from 3.8% late Monday.
In other market highlights:
* Hewlett-Packard fell $2.56, or 5.5%, to $44.27. A day after confirming it was in talks with Electronic Data Systems, the Palo Alto-based computer maker said it had agreed to buy the tech services provider for $12.6 billion. EDS rose 26 cents to $24.34.
* Wal-Mart dropped $1.37, or 2.4%, to $56.65 after the giant retailer reported first-quarter profit that topped Wall Street predictions.
* IndyMac Bancorp tumbled 74 cents, or 24%, to $2.32, its second consecutive all-time low, after analysts at Friedman, Billings, Ramsey said the Pasadena-based mortgage lender needed to raise more capital than planned. On Monday, IndyMac reported a first-quarter loss, omitted some dividends and said it probably wouldn't make money this year.
* Fluor surged $24.67, or nearly 15%, to $191.03 after the engineering and construction contractor reported a 63% jump in profit and said it won a number of new projects. The news lifted Pasadena-based Jacobs Engineering, which rose $5.02, or 5.6%, to $93.94.
* Office supply retailer Staples raised its hostile bid to acquire Dutch rival Corporate Express by 10%. Corporate Express said it was willing to consider the offer, and Staples rose 48 cents, or 2.2%, to $22.44.
* Overseas, key stock indexes increased 1.5% in Japan, 0.3% in Germany and 0.5% in France. Shares declined 0.1% in Britain.