A sharp jump in productivity, the biggest surge in two years, lifted stocks Tuesday, but early gains sputtered, leaving the market up only slightly at the close.
Investors welcomed word from the Labor Department that the nation’s productivity rose 4.7 percent over the summer. That helped push labor costs lower, easing fears of inflation on Wall Street.
Stocks also got a boost from a drop in crude oil prices, coming one day after crude futures topped $60 per barrel and reached a one-month high as a snowstorm approached the east coast. A barrel of light crude was quoted at $59.90, down a penny, on the New York Mercantile Exchange.
Despite the advance, trading volume was light, leading analysts to question whether the market could rally substantially further over the next few weeks.
“There’s still an element of the self-fulfilling prophecy here, in that you’re seeing people jump into a rally just because it’s the end of the year and we’re supposed to have a rally,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research. “I wouldn’t be surprised if we’re lollygagging around here until the end of the year.”
In fact the rally faded by the end of the day and the Dow Jones industrial average ended up just 22 points 10,857. The Dow lost 42.50 on Monday.
Broader stock indicators also scored modest gains Tuesday.
The market followed a pattern it has repeated many times since its recent rally began in October: Gains early in the day were eroded by sharp selling before the close.
Bonds came back after losses in the previous session, with the yield on the 10-year Treasury note falling to 4.54 percent from 4.57 percent late Monday. Gold prices rose for the fourth straight day to levels not seen since the early 1980s, with spot gold settling in New York at $511.20 an ounce, up $1.30.
The dollar was up against most major currencies.
Many large-cap stocks had a strong day. Wal-Mart Stores Inc. rose 48 cents to $47.62; General Motors Corp. rose 26 cents to $22.39 and The Walt Disney Co. rose 51 cents to $25.52.
Dow component Time Warner Inc. edged higher after The Wall Street Journal reported that the company’s America Online division is close to a deal with Microsoft Corp. to create an online advertising service to compete with that of Google Inc. Microsoft slipped 16 cents to $27.69, while Google fell $1.31 to $404.54.
Sears Holdings Corp. posted sharply lower profits from the prior year, but still beat Wall Street forecasts for the quarter. Sales at both Kmart and Sears stores were down from a year ago, continuing a sales slump for the newly combined company. Sears Holdings nonetheless surged $6.26 to $122.97.
Health care products maker Johnson & Johnson fell 58 cents to $60.47 after it said its renegotiated offer for heart device maker Guidant Corp. is fairly valued and that it remains committed to the deal, one day after Guidant received a higher bid from Boston Scientific Corp.
Apple Computer Inc. rose $2.23 to $74.05 after it announced a deal with NBC Universal to sell episodes of a dozen shows on Apples online iTunes store. The shows, ranging from “Alfred Hitchcock Presents” to “Battlestar Galactica,” expand Apple’s TV catalog from five shows to 16. General Electric Co., which owns 80 percent of NBC Universal, rose 3 cents to $35.80.
Advancing issues outnumbered decliners by roughly 9 to 7 on the New York Stock Exchange, where volume came to 1.60 billion shares, down from 1.68 billion Monday.