Anticipation of upcoming quarterly earnings reports kept investors on the sidelines Tuesday.
The Dow Jones Industrial Average gained 27.57 points to 13,534.89, the fifth consecutive winning session. The Nasdaq Composite Index dropped 6.732 points to 3,110.78, weighed down by another drop in Apple shares. The S&P 500 Stock Index rose 1.66 points to 1,472.34.
The Commerce Department reported retail sales in December rose 0.5 percent, evidence holiday shopping remained active heading to the start of the new year. The report also revised higher sales report for October and November.
Gold rallied $14.50 to $1,683.90 an ounce. Oil, however, slipped 86 cents to $93.28 a barrel.
Dell Inc. (Nasdaq: DELL) rallied 7.2 percent, following Monday’s 13 percent surge, as the computer maker is said to be in buyout talks. Apple Inc. (Nasdaq: AAPL) and Hewlett-Packard Co. (NYSE: HPQ) dropped at least 2.4 percent to pace losses in technology shares. Facebook Inc. (Nasdaq: FB) retreated 2.7 percent after the company introduced a tool, Graph Search, for searching information posted to its social network.
With as little as a month until the United States runs out of money to pay its bills, President Barack Obama warned Republicans in Congress not to use the need for a debt-limit increase to force through new spending cuts. Obama insisted Monday he won’t negotiate on raising the debt ceiling because the U.S. has no choice other than to pay for spending it has authorized. Many Republicans in Congress say a boost in borrowing authority must be linked to spending cuts.
The Treasury Department has been using emergency measures since the end of December to prevent a breach of the $16.4 trillion debt limit. In a letter Monday to House Speaker John Boehner, Treasury Secretary Timothy Geithner said the department expects to exhaust those measures “between mid-February and early March.”
Since 1960, Congress has raised or revised the limit 79 times, including 49 times under Republican presidents, according to the Treasury Department. A failure of U.S. lawmakers to raise the nation’s debt ceiling would prompt a “formal review” of its credit rating, Fitch Ratings said in a press release Tuesday.
Tuesday’s rally in the Dow Jones Transportation Average extended this year’s advance to 6.3 percent, compared with a 3.2 percent gain in the S&P 500. The index rose 5.7 percent last year, underperforming the S&P 500.
“The transportation sector lagged the general market last year,” Richard Weiss, who oversees $16 billion as a senior portfolio manager at American Century Investments in Mountain View, Calif., said. “It’s catching up in 2013 pretty significantly. We’re relatively optimistic on the consumer and the economy. I don’t think that anybody is arguing at this point that the consumer and the housing sector are on the mend. That’s a major driver to the U.S. and the global economy.”
Retailers had the second-best performance among 24 industries in the S&P 500. Limited Brands Inc. (NYSE: LTD) rose 2 percent to $46.43, Abercrombie & Fitch Co. (NYSE: ANF) added 2.8 percent to $50.20, and J.C. Penney Co. (NYSE: JCP) climbed 3.4 percent to $18.71.
Express Inc. (NYSE: EXPR) rallied 24 percent to $17.40. The retail apparel chain raised its outlook for the fourth quarter and full year 2012.
Lululemon Athletica Inc. (Nasdaq: LULU) slid 3.9 percent to $69.47 after the Canadian yoga-wear retailer forecast fourth-quarter sales that trailed analysts’ estimates.
Companies from Intel Corp. (Nasdaq: INTC) to General Electric Co. (NYSE: GE) are caught in an earnings slump that shows few signs of improving until midyear as a weak global economy and gridlock in Congress weigh on profits.
Intel, the world’s largest semiconductor maker, is poised to report its biggest quarterly earnings drop in 3 1/2 years this week, based on analysts’ estimates compiled by Bloomberg. GE, the maker of jet engines and electrical generation equipment, may post its slowest profit growth in three quarters.
The results would contribute to a predicted 2.5 percent increase in fourth-quarter earnings for the S&P 500, the second-worst showing since 2009. Without a bump from financial companies that have cut jobs, the gain would be lower at 0.4 percent. A pickup may start in the second quarter, when analysts foresee earnings rising 8.2 percent from improving employment and housing and more clarity on government spending.