NEW YORK, July 15 – US stocks struggled in early trade on Tuesday as investors booked profits from a big rally and mulled a stronger-than-expected profit report from financial giant Goldman Sachs.
The Dow Jones Industrial Average dropped 30.01 points (0.36 percent) to 8,301.67 at 1500 GMT, pulling back after a strong triple-digit rally on Monday.
The technology-heavy Nasdaq composite dipped 5.51 points (0.31 percent) to 1,787.70 while the broad-market Standard & Poor\’s 500 index edged down 2.13 points (0.24 percent) to 898.92.
Market action came after US finance giant Goldman Sachs posted a net profit of 3.44 billion dollars in the second quarter, topping market expectations and easing fears about a collapsing financial system.
Scott Marcouiller at Wells Fargo Advisors said Goldman\’s earnings "beat expectations, but there was a muted response in the stock as it was largely discounted yesterday."
The market also reacted to news that US retail sales rose for the second consecutive month in June, by 0.6 percent, but with gasoline sales accounting for much of the increase due to higher prices.
The report highlighted the "uneven, and uncertain, nature of the recovery process," said Patrick O\’Hare at Briefing.com.
Another report showed surging energy costs pushed up US wholesale prices by a sharp 1.8 percent in June.
Although the rise in prices was steeper than expected, analysts said the big factor was energy costs which have since retreated, and that the overall inflation picture is subdued.
"Despite June\’s surprise price increases, weak demand will dominate near-term inflation trends for several months to come given the depth of the recession," said Mark McMullen at Moody\’s Economy.com.
Goldman Sachs shares edged up 0.56 percent to 150.28 dollars, extending gains from Monday, but the rest of the finance sector was under pressure.
Among retail banking giants, Bank of America fell 1.08 percent to 12.85 dollars and JPMorgan Chase dropped 1.15 percent to 34.31 dollars.
CIT Group, the business lender seeking fresh government aid to avert bankruptcy, rebounded 9.6 percent to 1.48 dollars after hefty losses Monday.
In the health care sector, Johnson & Johnson rose 1.18 percent to 58.40 dollars after reporting a better-than-expected quarterly profit of 3.2 billion dollars.
In the tech space, Dell slid 6.95 percent to 12.11 dollars as the computer giant warned of ongoing weak demand.
Take-Two Interactive Software slumped 10.58 percent to 8.03 dollars after downgrading its outlook for the rest of the year.
Intel, the chip giant set to report earnings after the close of trade, rose 0.24 percent to 16.53 dollars.
Bonds fell. The yield on the 10-year US Treasury bond increased to 3.411 percent from 3.346 percent Monday and that on the 30-year bond climbed to 4.292 percent from 4.233 percent. Bond yields and prices move in opposite directions.