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Stocks closed higher on the back of better than expected consumer confidence data and lower oil prices. However, investors voiced fresh worries about the strength of corporate profits. Stocks staged a comeback at the end of a volatile session in which investors struggled with uncertainties.

Today, the Dow Jones industrial average closed up 52.66 or 0.5% to 11,103.71, the broader Standard & Poor’s 500 index closed up 7.97 or 0.6% to 1,268.88, and the tech-fueled Nasdaq composite index closed up 12.06 or 0.6% to 2,073.90.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by two to one as 1.74 billion shares changed hands. On the Nasdaq, advancers beat decliners 18 to 11 on volume of 1.96 billion shares.

It is apparent investors feel that the market is undervalued and is not headed toward a hard landing for the economy. Also, the Feds will not make a mistake of raising interest rates too high. However, corporate profits remain a concern. While investors are trying to keep their toes in the water, we are really at a crossroad on a technical level and that’s been stalling the markets. The market is likely to continue see-sawing in the short term, amid the typically mild summer trading volume.

A strong read on consumer confidence led the data news. U.S. consumer confidence strengthened a bit with the index rising to 106.5 in July from a revised 105.4 in June. This was an unexpected gain since economists were expecting it to slip to 103.9. Sales of existing U.S. homes fell by a smaller-than-expected 1.3% in June, and the inventory of unsold homes rose to a record 3.725 million. However, the slowing of existing home sales was not as much as economists had expecting.

Stock of AT&T closed up $1.17 or 4.2% to $28.95, after reporting a bigger than forecast rise in quarterly profit, thanks in part to its Cingular Wireless joint venture. The net income climbed 80% in the second quarter and the profit was driven by wireless gains, cost reductions and the acquisition of old Ma Bell, and AT&T Corp.

Shares of McDonald’s fell 8 cents to $34.76. The company reported a nearly 60% increase in quarterly profit, due to across the board growth in the U.S. and the best European results in more than a decade. Earnings climbed to $834.1 million from $530.4 million, revenue jumped 9% to $5.6 billion, and global same-store sales rose 5.5%.

Chemical maker DuPont closed up $0.10 to $40.67, after reporting quarterly earnings and revenue that were short of estimates, due to higher energy and ingredient costs. In addition to rising raw material costs, it also faced a weaker market for its agricultural products.

Stock of Altria Group Inc. rose 56 cents to $80.05, on reporting a higher second quarter profit, helped by an increase in domestic tobacco market share and strength in its food business. It also raised its annual profit projection. Revenue rose 4% to $25.77 billion, the earning to $2.71 billion, and the EPS came to $1.41 against the expected $1.37.

Conglomerate 3M Co. closed down $3.58 or 5% to $68.11, after posting quarterly earnings that rose from the prior year, but missed forecasts. The manufacturer has affirmed its yearly outlook but expressed concern about margins in some of its divisions.

Stock of United Parcel Service Inc. tumbled down $8.20 or 10.3% to $71.80, after reporting quarterly earnings that rose from a year earlier, but were short of analysts’ forecasts. The company also issued a current-quarter forecast that was shy of estimates.

U.S. light crude oil for September delivery fell $1.30 to settle at $73.75 a barrel on the New York Mercantile Exchange on hopes for progress in the conflict between Israel and Hezbollah militants in Lebanon. Traders are also focusing on a potential build in inventories and the slowing down of the economy which will lead to less consumption.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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