NEW YORK – Wall Street fluctuated Tuesday as investors decided to cash in some of Monday's big gains as they combed through another batch of quarterly earnings.
Some retreat was to be expected after the Dow Jones industrial average shot up 413 points in the previous session. But investors were also poring over third-quarter earnings reports expected for signs of how serious the economic downturn is; companies' outlooks for the fourth quarter and beyond were under particular scrutiny.
Among those companies reporting Tuesday, DuPont Co. said it is lowering its 2008 forecast, Caterpillar Inc. earnings slipped amid higher raw material costs, and Pfizer Inc. topped estimates.
Still, investor anxiety appears to have lessened considerably compared to the previous two weeks when fears about tightening world credit and the health of the economy battered stocks across the globe.
And analysts have warned that the market will see a stretch of back-and-forth sessions as Wall Street recovers from this month's huge drop.
In the first hour of trading, the Dow fell 15.05, or 0.16 percent, to 9,250.38 after falling more than 100 but also bobbing into positive territory.
Broader indexes were also lower. The Standard & Poor's 500 index fell 2.54, or 0.26 percent, to 982.86. The Nasdaq composite index shed 4.26, or 0.24 percent, to 1,765.77.
On Monday, markets spiked on more signs of a reviving credit market and support from Federal Reserve Chairman Ben Bernanke for further steps to aid the economy, including an additional stimulus package.
Strains in the credit markets eased further in response to a sweeping series of bailout measures by world governments, including a joint U.S. and European plan to buy stakes in private banks to boost to their lending. Demand for Treasury bills, regarded as the safest assets around, lessened further Tuesday in a sign that credit markets are gradually returning to a healthy state.
On Tuesday, the Federal Reserve took more steps to break through a credit clog that has hobbled lending and threatens to plunge the country into a deeper recession. The central bank announced that it will start buying commercial paper — a crucial short-term funding mechanism many companies rely on for day-to-day operations — from money market mutual funds.
The three-month Treasury bill Monday yielded 1.27 percent, up from 1.12 percent late Monday. The yield fell to 0.20 percent last Wednesday, meaning investors were willing to take the slimmest of returns in exchange for a safe place to keep their money.
And longer-term Treasurys were little changed. The yield on the benchmark 10-year note, which moves opposite its price, fell to 3.80 percent from 3.84 percent late Friday.
Meanwhile, bank-to-bank lending rates continued their retreat, another indication that credit is getting easier to obtain. The London Interbank Offered Rate, or Libor, dropped to the lowest levels in over a month Tuesday. The rate on three-month loans in dollars shed 0.23 percentage points to 3.83 percent, falling for the seventh straight day.
Besides being an indicator of the credit market's health, Libor is used to set rates for consumer loans including mortgages and credit cards.
The dollar was higher against other major currencies, while gold prices fell.
In earnings news, chemical manufacturer DuPont said that it is still recuperating from a violent hurricane season, which helped drive third-quarter earnings down 30 percent and trimmed the company's 2008 earnings forecast. Shares fell $1.15, or 3.2 percent, to $35.00.
Caterpillar fell 13 cents to $40.77 after reporting that third-quarter profit slipped 6 percent. The world's largest maker of construction and mining equipment said higher raw material costs offset record global sales. The company, which noted "recessionary conditions" in North America, forecast flat sales for 2009.
Pfizer rose 40 cents, or 2.4 percent, to $17.74 after narrowly beating projections for the third quarter.
Light, sweet crude fell $1.72 to $72.53 a barrel on the New York Mercantile Exchange. On Monday, oil rose moderately after OPEC's president said members were planning a substantial production cut in an effort to halt falling prices.
The Russell 2000 index of smaller companies fell 2.84, or 0.52 percent, to 544.00.
Financial markets overseas were mostly higher.
Japan's Nikkei stock average closed up 3.34 percent. Britain's FTSE 100 was down 1.20 percent, Germany's DAX index was down 1.20 percent, and France's CAC-40 was up 0.69 percent.