Wall Street gave up a substantial early gain and staggered to a mixed finish Tuesday after a Federal Reserve official warned that interest rates might continue to climb.
The Dow Jones industrials had surged more than 111 points before Federal Reserve Bank of Atlanta President Jack Guynn said in a speech that the Fed's Open Market Committee was not yet ready to stop its policy of modest rate hikes. Guynn's comments set off profit-taking that left the Dow with a minimal gain and the Standard & Poor's 500-stock index and Nasdaq composite index with slight losses.
It was an earlier, bullish assessment of the economy from Fed Chairman Alan Greenspan, given in a speech broadcast at a meeting of central bankers in Beijing late Monday, that triggered the initial advance. Greenspan said the economy would remain strong and intimated that the Fed could soon stop raising interest rates, at least for the short term.
With seemingly conflicting comments from the Fed committee members, investors remained confused as to whether the economy was headed for a harsh slowdown and whether the Fed would continue raising interest rates through the summer.
The Dow rose 16.04, or 0.2 percent, to 10,483.07. The Nasdaq fell 8.60, or 0.4 percent, to 2067.16, and the S&P 500 slipped 0.25, or 0.02 percent, to 1197.26.
General Motors gained 31 cents, to $30.73. The struggling automaker said it will cut 25,000 jobs by 2008 as it attempts to rein in spending.
Morgan Stanley edged 3 cents higher, to $49.14, even though another top employee left the company. Managing director David Topper, a 22-year veteran, resigned to work for J.P. Morgan Chase. J.P. Morgan Chase slid 3 cents, to $35.48.
Sears Holdings tumbled $13.41, to $141.50, after posting a loss for the quarter, its first earnings report since Kmart Holdings merged with Sears, Roebuck.
Albertson's slipped 5 cents, to $21.45, as the nation's second-largest grocery store chain tripled its quarterly earnings from a year ago.
Conagra Foods slid $1.41, to $24.48, after the company said it could miss Wall Street's quarterly earnings targets by as much as 10 cents a share.
New York Stock Exchange composite index rose 14.83, to 7199.32.
American Stock Exchange index rose 1.45, to 1512.95.
Russell 2000 index of smaller-company stocks rose 0.84, to 623.78.
NYSE: 1.44 billion shares, up from 1.17 billion on Monday. Advancers outnumbered decliners 4 to 3.
Nasdaq: 1.87 billion shares, up from 1.5 billion. Decliners outnumbered advancers 10 to 9.
Crude oil for July delivery: $53.76, down 73 cents.
Gold for current delivery: $424.80 a troy ounce, down from $426.50 on Monday.