[BRIEFING.COM] Stocks were volatile Tuesday as the return of inflation fears, volatile oil prices, mixed earnings news and ongoing unrest in the Middle East had investors scrambling to decide whether or not oversold conditions warranted owning stocks ahead of important CPI data and two-day tstimony on the economy from Fed Chairman Bernanke. When it was all said and done, oil prices selling off sharply in the final hour of trade and a late-day analyst upgrade on Intel Corp (INTC 18.21 +0.37) acted as sources of reassurance that things were not as bad as initially thought.
Crude for August delivery rebounding as much as 1.7% to $76.55 per barrel intraday, amid escalating tensions between Israel and Hezbollah, exacerbated early concerns about the impact higher energy prices were having on the economy. To wit, the Labor Dept. reported that total PPI rose a stronger than anticipated 0.5% in June, fueled by a 0.7% rise in energy prices. Even after backing out volatile energy costs, the more closely watched core rate rose 0.2% (consensus 0.2%), leaving the core rate up 1.9% year/year -- the highest since September. The 10-year note tumbled 16 ticks, lifting the yield to 5.13%. Be that as it may, since the PPI data are much more volatile than tomorrow's more influential CPI data, an in-line read on core PPI provided some indication that inflation is not increasing significantly and may actually be holding steady.
Also keeping investor enthusiasm in check throughout most of the session was a warning from Target Corp. (TGT 45.51 -2.04), which hit a 52-week low after slashing its July same-store sales outlook, adding to the market's concerns about there being a slowdown in discretionary spending due to rising energy prices. However, after oil eventually closed at a three-week low below $74 per barrel, matching Monday's 2.3% reversal as traders became convinced the conflict will not spread deeper into the oil-rich Middle East, overall sentiment improved to leave Consumer Discretionary as the only sector to post a loss.
Among the more influential sectors eking out modest gains into the close were Financials, as the brokerage group got a boost after TD Ameritrade (AMTD 14.69 +1.05) reported it achieved a record quarter. Aside from the turnaround in Intel late in the day, Technology also got a boost from Network Appliance (NTAP 28.13 +1.04), whose reaffirmed Q1 EPS outlook lent some assurance about tech's growth prospects and eventually overshadowed Sanmina-SCI's (SANM 3.78 -0.49) Q3 warning. Industrials was another important sector offering some notable leadership after United Technologies (UTX 58.88 +0.92) beat analysts' expectations and raised its fu
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