NEW YORK (CNNMoney.com) -- Stocks trimmed losses by the close Wednesday, but remained in the red after a weak durable goods orders report added to worries about the economy and investors soured on Yahoo's partnership with Microsoft.

The Dow Jones industrial average (INDU) lost 26 points, or 0.3%. The S&P 500 (SPX) index fell 4 points, or 0.5%. The Nasdaq composite (COMP) gave up 8 points, or 0.4%.

In addition to the day's news, Wall Street was also vulnerable to a pullback in the wake of a big two-week rally that lifted the Dow and S&P 500 by more than 11% and the Nasdaq by 12%.

The rally was sparked by a series of better-than-expected quarterly results. But with more than half of the S&P 500 companies yet to report, investors are showing a little caution.

"It's basically a too far, too fast scenario," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.

He said the durable goods orders report follows other recent indications that the economy continues to be "less bad" rather than better. He pointed to housing reports released earlier in the week that were better-than-expected, but showed improvement mostly due to low prices and foreclosure sales.

On Tuesday, a weaker-than-expected consumer confidence report and a tepid response to a 2-year note auction sparked a selloff. A similarly lukewarm reaction to Wednesday's 5-year note auction added to the weakness in the stock market.

As for Yahoo, Rovelli said there is a perception that it dropped the ball by not securing money from Microsoft upfront, as had been expected.

Thursday brings the weekly jobless claims report from the Labor Department. In addition, quarterly results are due from Dow components Exxon Mobil (XOM, Fortune 500), Travelers (TRV, Fortune 500) and Walt Disney (DIS, Fortune 500).

Economy: U.S. durable goods orders plunged 2.5% in June, a far bigger decline than economists were expecting. The drop revived some worries that the economy may not be stabilizing as quickly as investors have been betting.

Orders for long lasting manufactured goods saw the biggest monthly decline since January, the Commerce Department reported. Orders rose a revised 1.3% in May. Economists surveyed by Briefing.com thought orders would fall 0.6%.

However, orders excluding transportation rose 1.1% versus forecasts for no change. Last month, the same measure rose 0.8%.

Around 2 p.m. ET, the Federal Reserve released its periodic "Beige Book" survey of economic conditions in its twelve districts. The report showed that economic activity remained weak -- but for most districts, the pace of the decline has slowed.

Stocks showed little reaction to the report.

Microsoft-Yahoo: The tech bellwethers have finally completed a 10-year search deal that takes aim at Google's dominance in the online market.

Yahoo (YHOO, Fortune 500) will use and promote Microsoft (MSFT, Fortune 500)'s Bing search engine on its site. In exchange, the company will keep 88% of the revenue from all search ad sales for the first five years. Yahoo will also have the right to sell ads on some Microsoft sites.

However, investors expressed some disappointment that Yahoo will not receive an upfront payment, sending its shares down by 12%.

Microsoft attempted to buy Yahoo outright for $47.5 billion last year, but was rebuffed by the company. Microsoft shares gained 1.4% Wednesday.

Oil prices and stocks: U.S. light crude oil for September delivery fell $3.88 to settle at $63.35 a barrel on the New York Mercantile Exchange.

Oil stocks declined in tandem, with Dow components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) both slipping. The Amex Oil (XOI) index lost 2%.

Quarterly results: CNNMoney.com parent Time Warner (TWX, Fortune 500) reported weaker quarterly earnings that beat estimates on weaker revenue that missed estimates. Shares fell 1.8%.

Sprint Nextel (S, Fortune 500) reported weaker quarterly sales and earnings as subscribers continued to decline. Shares fell 12%.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.66% from 3.68% late Tuesday. Treasury prices and yields move in opposite directions.

Other markets: In global trading, European markets mostly ended higher and Asian markets ended lower.

In currency trading, the dollar gained versus the euro and the Japanese yen.

COMEX gold for December delivery fell $12 to settle at $929.70 an ounce.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 1.25 billion shares. On the Nasdaq, decliners topped advancers eight to five on volume of 2.1 billion shares. 

NEW YORK (CNNMoney.com) -- U.S. stocks were poised to fall at Wednesday's open, as investors prepared to back off after pushing Wall Street higher over the past few weeks.

At 8:40 a.m. ET, Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were lower, with declines steepening slightly after a disappointing report on orders for durable goods.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins in New York.

U.S. stocks were volatile Tuesday and finished the session mixed as investors weighed a weak reading on consumer sentiment and had trouble finding momentum in the aftermath of the recent rally.

Peter Cardillo, chief market economist for Avalon Partners, said Tuesday's weak Treasury auction "gave the market a bad case of indigestion" that was offset somewhat by bullish traders.

Cardillo said Wednesday trading will be heavily influenced by the economic reports.

Economy: The U.S. Census Bureau reported that durable goods orders fell 2.5% in June, which was much worse than expected.

The durable goods orders, which reflect manufacturing activity, were expected to slip 0.6% for the month of June, according to a Briefing.com consensus, compared to an increase of 1.3% in May.

Investors will also look to the Fed's Beige Book of economic conditions, due out at 2 p.m. ET.

Corporate results: Investors have another batch of results to consider.

Time Warner (TWX, Fortune 500), the largest media company in the world and the parent company of CNNMoney.com, reported that its second-quarter profit from continuing operations slipped to 43 cents per share from 47 cents a year earlier.

Sprint Nextel (S, Fortune 500) a wireless communications provider, reported a diluted loss of 13 cents per share in the second quarter, which was slightly larger than the 12 cent loss per share in the year-ago quarter.

Tech: Microsoft (MSFT, Fortune 500) and Yahoo (YHOO, Fortune 500) have reached a long-awaited 10-year search deal, the companies announced. Microsoft will acquire Yahoo's search technologies to integrate into its existing platforms, while Yahoo will become the exclusive sales force for both companies' search business, according to their joint statement.

World markets: Asian shares dived, with Shanghai stocks losing 5%. Sentiment was better in Europe, where the major indexes rose in midday trading.

Money and oil: The dollar rose against the major international currencies, including the euro, the yen and the British pound. The price of oil dropped $1.22 per barrel, to $66.10. 

NEW YORK (CNNMoney.com) -- Stocks ended mixed Tuesday as investors weighed a weaker-than-expected consumer confidence report and a better-than-expected housing report in the aftermath of a big rally.

The Dow Jones industrial average (INDU) lost 12 points, or 0.1%. The S&P 500 (SPX) index fell almost 3 points, or 0.3%. The Nasdaq composite (COMP) rose 7 points, or 0.4%.

Stocks have gained for the last two weeks, as investors have breathed a sigh of relief that second-quarter results have been mostly better than expected. The Dow and S&P 500 have added around 11.5% and the Nasdaq has gained 12%.

But after such a big run in a short period of time, stocks have become vulnerable.

Sprint Nextel (S, Fortune 500), Time Warner (TWX, Fortune 500), Aetna (AET, Fortune 500) and ConocoPhillips (COP, Fortune 500) are all due to report results Wednesday morning.

The June durable goods orders report is also due Wednesday morning, along with the weekly crude oil inventories report from the Energy Information Administration. In the afternoon, the Federal Reserve releases its periodic "Beige Book" report on economic activity in its 12 districts.

Economy: Consumer confidence slipped for the second straight month, the Conference Board reported, as growing joblessness and a prolonged recession took a toll on investor psychology. The index dipped to 46.6 in July from 49.3 in June. Economists thought the index would slip to 49, according to a Briefing.com survey.

"Confidence has remained low, and with unemployment rising to over 10% in the next few months, it's going to remain low," said Scott Anderson, senior economist at Wells Fargo.

As a result of growing joblessness and weak consumer confidence, spending by consumers is likely to remain sluggish, he said. That doesn't bode well for GDP growth, which drives two-thirds of consumer spending.

On Friday, the government releases the initial reading on second-quarter GDP. The report is expected to show that GDP shrank at a 1.5% pace, according to economists, after shrinking at a 5.5% pace in the first quarter. The slower pace may signal better times are on the horizon.

On a more positive note, a key measure of home prices showed its first monthly increase in three years. The S&P/Case-Shiller 20-city home price index rose 0.5% in May. The index dropped 17.1% versus a year ago, short of forecasts for a bigger drop of 17.9%. It was the fourth month in a row that the pace of declines lessened.

On Monday, another report showed sales of new homes rose more than expected in May.

"I do think we are seeing a bottoming in the housing market," Anderson said. "Sales activity has picked up for both new and existing homes and that has helped stabilize prices. But it's mostly about affordability."

Oil prices and stocks: Among the companies reporting results on Tuesday, Valero Energy (VLO, Fortune 500) reported weaker revenue and earnings that topped estimates. Shares fell 2.4%.

It was one of several oil services companies tumbling, along with the price of crude.

U.S. light crude oil for September delivery fell $1.15 to settle at $67.23 a barrel on the New York Mercantile Exchange.

Dow components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) both declined modestly. The Amex Oil (XOI) index fell 1.4%.

Other company news: Bank of America (BAC, Fortune 500) shares gained after the company said it plans to reduce some of its 6,100 branch network. Reports said it planned to cut as much as 10% of the network, but the bank said the figure was smaller.

In deal news, IBM (IBM, Fortune 500) said it will buy Chicago-based business software maker SPSS in an all-cash deal worth $50 per share or $1.2 billion.

Sprint Nextel (S, Fortune 500) will buy the remaining 87% of Virgin Mobil it doesn't already own in an all-stock deal worth $5.50 per share or $483 million.

Media conglomerate Viacom (VIA) reported weaker quarterly profit that nonetheless topped expectations.

This week is the biggest for corporate results, with 146 of the S&P 500 due to release reports. So far, 77% of reported earnings have topped forecasts, versus the long-term average of 61%, according to earnings tracker Thomson Reuters.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.70% from 3.72% late Monday. Treasury prices and yields move in opposite directions.

The 2-year notes declined after a $42 billion auction did not generate as much interest as the prior month's 2-year note auction.

Other markets: In global trading, European and Asian markets ended higher.

In currency trading, the dollar fell versus the euro and fell against the Japanese yen.

COMEX gold for December delivery fell $14.60 to settle at $941.70.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 1.24 billion shares. On the Nasdaq, advancers topped decliners by seven to six on volume of 2.24 billion shares. 

NEW YORK (CNNMoney.com) -- Stocks ended higher Monday, at the end of a choppy session on Wall Street in which investors weighed better-than-expected results with some wariness after a two-week rally.

The Dow Jones industrial average (INDU) added 15 points, or 0.2%. The S&P 500 (SPX) index climbed 3 points, or 0.3%. The Nasdaq composite (COMP) gained 2 points, or 0.1%.

In the last two weeks, the Dow and S&P 500 have both gained more than 11% as investors welcomed better-than-expected results. After such an advance, stocks were mixed Monday.

Worries about the economy in the wake of a dour June jobs report dragged on stocks in early July, with investors betting that second-quarter results would disappoint, said Ron Kiddoo, chief investment officer at Cozad Asset Management. But the reports so far have been largely better than expected and stocks have rallied in response.

"Even if it's mostly just cost cutting that's driving the earnings, people are relieved," Kiddoo said.

So far, reported earnings are beating expectations by 77% versus the long-term average of 61%, according to earnings tracker Thomson Reuters. But only a little more than one-third of the S&P 500 companies have reported so far. This week brings the biggest batch of corporate results yet, with 146 of the S&P 500 companies due to release results.

A better-than-expected new home sales report seemed to have little impact on the broad market, although it did lift housing stocks, with the Philly Housing index climbing 2%.

"We've had a terrific rally, so it's not surprising that we're not seeing a big reaction to the housing number," said Michael Church, president at Addison Capital.

He said that, looking forward, the stock market can probably keep grinding higher, and that the economic data will continue to support that move.

Tuesday brings the July reading on consumer confidence from the Conference Board and the S&P/Case-Shiller Home Price index

Corporate results: Monday brought quarterly results from a number of companies, including Dow component Verizon Communications (VZ, Fortune 500).

Verizon reported weaker earnings and stronger revenue, both of which were in line with estimates. But the telecom also said it was cutting 8,000 jobs in its wireline business, due to the impact of the recession.

Shares of the Dow component fell 1.6%.

Honeywell (HON, Fortune 500) reported weaker earnings that met estimates and weaker revenue that missed estimates. The aerospace and transportation manufacturing giant also warned that 2009 earnings and sales will come in at the low end of its previous forecast. Shares ended the day modestly higher.

RadioShack (RSH) reported higher quarterly earnings that topped estimates, thanks to lower costs and better sales of netbooks, prepaid wireless handsets and digital televisions. However, investors took a "sell the news" approach, sending shares 6.6% lower.

Aetna (AET, Fortune 500) said its profit slumped due to higher medical expenses. The health insurer reported weaker earnings that missed estimates on higher revenue that topped estimates. Aetna also cut its 2009 profit forecast. Shares fell 2.7%.

Other movers: A variety of bank shares rose, including Wells Fargo (WFC, Fortune 500) and Dow component Bank of America (BAC, Fortune 500). Regional banks surged too, including KeyCorp (KEY, Fortune 500), Regions Financial (RF, Fortune 500) and Fifth Third Bancorp (FITB, Fortune 500).

The KBW Banking (BKX) index rallied 3.1%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by almost two to one on volume of 1.04 billion shares. On the Nasdaq, advancers beat decliners five to four on volume of 2.16 billion shares.

Economy: New home sales in June rose to a 384,000 unit annual rate from a revised 346,000 unit annual rate in May. Economists surveyed by Briefing.com expected 352,000. However, sales fell 28% versus a year ago. (Full story)

Reports are due later this week on durable goods orders, jobless claims, manufacturing and GDP.

Economists expect that second-quarter GDP shrank at a 1.5% annualized rate after shrinking at a 5.5% annualized rate in the first quarter.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.72% from 3.66% late Friday. Treasury prices and yields move in opposite directions.

Other markets: In global trading, European and Asian markets ended higher.

In currency trading, the dollar fell against the euro and gained against the Japanese yen.

U.S. light crude oil for September delivery rose 33 cents to settle at $68.38 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery rose 40 cents to settle at $954.20 an ounce. 

NEW YORK (CNNMoney.com) -- Stocks rallied Thursday, with the Dow jumping 200 points and hitting its highest point since November, as investors welcomed better-than-expected quarterly results and home sales.

The Dow Jones industrial average (INDU) gained 188 points, or 2.1%, closing at its highest point since Nov. 5. The S&P 500 (SPX) index added 22 points, or 2.5%.

The Nasdaq composite (COMP) gained 47 points, or 2.5%. The Nasdaq has now closed higher for 12 consecutive sessions, its longest winning streak since January 1992.

Treasury bond prices plunged, raising the corresponding yields, as investors pulled money out of the safe-haven and put it into stocks. The dollar gained versus other major currencies. Oil and gold prices rose.

Stocks have been on the rise for the last week-and-a-half, bouncing after a four week retreat, as better-than-expected corporate reports have surprised investors.

"You are seeing companies in large part beating expectations in just about every sector, and while revenues are coming in a bit lower in a lot of categories, we seem to be able to look past that," said Jamie Cox, managing partner at Harris Financial Group.

Cost-cutting has largely driven the earnings growth, raising concerns about what the second-half economic growth is going to look like.

"Somebody's cost cutting means somebody else's job," said Ben Halliburton, chief investment officer at Tradition Capital Management.

He said that rising unemployment and its impact on an already-strapped consumer suggests that expectations for a second-half recovery are overdone.

"There's really no place for a recovery if the consumer is still on the decline," he said.

Friday brings a revised consumer sentiment reading from the University of Michigan, but the report is not likely to move markets.

Microsoft and American Express should be active Friday, after reporting quarterly results after the close of trading.

Microsoft (MSFT, Fortune 500) reported weaker earnings that topped estimates and weaker revenue that missed estimates. The tech leader said its results were due to weakness in the global PC and server markets.

American Express (AXP, Fortune 500) reported a big drop in earnings due to the cost of paying back the loan it received from the government last year. However, the earnings still managed to top analysts' forecasts.

Results: Ford Motor (F, Fortune 500) reported a second-quarter profit due to its efforts to reduce debt. The automaker also reported an operating loss that was narrower than a year ago and smaller than forecast. Ford's drop in revenue was also narrower-than-expected. Shares gained 9.4%.

Ford is the only U.S. automaker that was not forced to declare bankruptcy last quarter, as a result of the slowdown in auto demand amid the recession.

Dow component AT&T (T, Fortune 500) reported quarterly sales and earnings that fell from a year ago but topped estimates. The telecom benefited from its exclusive contract with Apple, as strong iPhone sales boosted subscriber growth. AT&T shares gained 2.6%.

Fellow Dow component 3M (MMM, Fortune 500) reported weaker quarterly sales and earnings that topped estimates. Considered to be a bellwether for the economy due to the breadth of its businesses, 3M also lifted its forecast for full-year profit. Shares gained 7.4%.

AT&T (T, Fortune 500) and 3M (MMM, Fortune 500) were among the 27 Dow components that rose, with three falling.

IBM (IBM, Fortune 500), Johnson & Johnson (JNJ, Fortune 500), Verizon Communications (VZ, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) were among the big Dow gainers.

But another Dow component, McDonald's (MCD, Fortune 500), disappointed investors by reporting a bigger-than-expected drop in revenue and an in-line drop in earnings. Shares fell 4.6%. Wal-Mart Stores (WMT, Fortune 500) and Boeing (BA, Fortune 500) were the other two losers.

Other company news: Bristol-Myers Squibb (BMY, Fortune 500) said late Wednesday that it will buy biotech company Medarex (MDX) for $2.4 billion.

Amazon.com (AMZN, Fortune 500) said Wednesday it would buy online shoe retailer Zappos.com for $807 million.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by over five to one on volume of 1.39 billion shares. On the New York Stock Exchange, advancers topped decliners by over three to one on volume of 3.13 billion shares.

Economy: The number of Americans filing new claims for unemployment rose to 554,000 last week from 524,000 in the previous week, according to a Labor Department report released Thursday morning. Economists thought claims would rise to 557,000, according to Briefing.com estimates.

June existing home sales rose to a 4.89 million unit annual rate from a revised 4.72 million unit rate in May, according to the National Association of Realtors. Sales were better than expected, with economists forecasting sales would rise to a 4.85 million annualized rate.

The median home price continued to slide, falling 15.4% versus a year ago.

Bonds: Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.66% from 3.54% Wednesday. Treasury prices and yields move in opposite directions.

Other markets: In global trade, European markets gained late in the day, while Asian markets ended higher.

In currency trading, the dollar gained against the euro and the Japanese yen.

U.S. light crude oil for September delivery rose $1.76 to settle at $67.16 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery rose $1.50 to settle at $954.80 an ounce.  

NEW YORK (CNNMoney.com) -- The Nasdaq gained for the 11th straight session Wednesday as investors welcomed Apple's profit results, but concerns about Boeing and Coca-Cola's profits dragged on the Dow.

The Dow Jones industrial average (INDU) lost 35 points, or 0.4%. The S&P 500 (SPX) index was little changed and the Nasdaq composite (COMP) gained 10 points, or 0.5%.

Stocks rallied Tuesday, with the Dow posting its highest close in six months as better-than-expected quarterly results overshadowed Federal Reserve Chairman Ben Bernanke's testimony on the economy. But the market was choppy Wednesday.

After drifting lower for four weeks straight, stocks have rallied in the last week. In the prior seven sessions, the S&P 500 gained 8.6% and the Dow gained 9.4%.

But stocks were choppy Wednesday, with only the Nasdaq extending the recent streak. The Nasdaq has risen for 11 straight sessions, gaining 10.3%.

Wednesday's action was a continuation of the uptrend of the last week or so, said Richard Campagna, chief investment officer at 300 North Capital.

Looking forward, "we're going to continue to have a stronger market punctuated by occasional periods like the backing and filling we saw in the previous month," he said.

Although the economic outlook remains shaky, conditions have stopped deteriorating, corporate profits seem to be gradually improving and there is still a lot of money on the sidelines ready to be put into stocks, he said.

Banks: Wells Fargo (WFC, Fortune 500) joined the parade of firms reporting surprisingly strong results this quarter. The company said it earned $3.17 billion, or 57 cents per share in the quarter, up 81% from a year ago and easily surpassing analysts' forecasts.

However, investors took a sell-the-news approach, sending shares 3.6% lower.

Morgan Stanley (MS, Fortune 500), however, reported a bigger-than-expected quarterly loss, due partly to a one-time charge related to paying back the billions in government loans it received as part of the bailout program last year. Shares ended little changed.

Techs: Apple (AAPL, Fortune 500) reported higher quarterly sales and earnings that topped forecasts in a report released late Tuesday. Strong sales of Macs and iPhones fueled the gains. Shares rose 3.5% Wednesday.

Yahoo (YHOO, Fortune 500) also released results late Tuesday. The Internet search behemoth reported better-than-expected earnings and in-line revenue, but said revenue from advertising slumped and third-quarter results and cash flow won't meet forecasts. After sliding in the morning, shares ended up gaining 3.5% Wednesday.

Advanced Micro Devices (AMD, Fortune 500) reported a wider-than-expected quarterly loss late Tuesday and a big drop in gross margins -- a key measure of profitability. Shares of the chipmaker plunged 13% Wednesday.

Other results: Dow component Boeing (BA, Fortune 500) reported higher quarterly earnings that beat forecasts on higher revenue that met forecasts. Shares fell 2.4%.

Boeing is one of the Dow's most influential issues. IBM (IBM, Fortune 500), United Technologies (UTX, Fortune 500), Caterpillar (CAT, Fortune 500) and Coca-Cola (KO, Fortune 500) were the other big losers.

Dow component Pfizer (PFE, Fortune 500) reported higher-than-expected quarterly earnings and also lifted its outlook for the rest of the year. Fellow drugmakers GlaxoSmithKline (GSK) and Eli Lilly (LLY, Fortune 500) also reported higher-than-expected quarterly results and boosted their full-year forecasts.

Shares of Dow component Coca-Cola fell one day after the beverage company reported higher-than-expected quarterly earnings and lower-than-expected revenue. On Wednesday, rival PepsiCo (PEP, Fortune 500) reported a bigger-than-expected quarterly profit.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers four to three on volume of 650 million shares. On the Nasdaq, losers beat winners eight to five on volume of 1.56 billion shares.

Economy: One day after telling a House panel that the economy was starting to stabilize but that housing and labor markets remain strained, Bernanke mostly repeated his testimony before the Senate Banking Committee on Wednesday.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.55% from 3.49% Tuesday. Treasury prices and yields move in opposite directions.

Other markets: In global trade, Asian markets ended lower, with the exception of Japan's Nikkei. European markets ended mixed.

In currency trading, the dollar gained against the euro and fell versus the Japanese yen.

U.S. light crude oil for September delivery fell 21 cents to settle at $65.40 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery fell $1.90 to settle at $953.30 an ounce. 

NEW YORK (CNNMoney.com) -- U.S. stocks were poised for a lower open Wednesday as the upbeat sentiment surrounding corporate earnings seemed to run its course and investors looked to results from Morgan Stanley and Wells Fargo.

At 7:10 a.m. ET, Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were lower.

Futures measure current index values against their perceived future performance.

U.S. stocks soared Tuesday, buoyed by earnings surprises. The rally lifted the blue-chip Dow to its highest close in six months, after a choppy trading day during which investors balanced better-than-expected earnings against Federal Reserve Chairman Ben Bernanke's sobering testimony on the economy.

As for the remainder of the corporate reporting period, the markets may have already rallied as much as they can, especially as they move close to the sluggish month of August, said Manus Cranny, market analyst at MF Global in London.

"I really, genuinely think you've had a super run," said Cranny. "We're going into the real holiday season, and I think a lot of people just don't want to go home short."

Economy: Investors will continue to watch Bernanke, who heads to Capitol Hill for his second day of testimony.

On Tuesday, Bernanke said the U.S. economy was showing signs of stabilization. But he also said the housing and labor markets are still not recovering, and that the economic recovery was likely to be uncertain and gradual going forward.

"I'm glad somebody's putting a bit of a reality spin on it, and I think he's managing our expectations very well," said Cranny.

But investors may be nervous ahead of reports from Morgan Stanley (MS, Fortune 500) and Wells Fargo (WFC, Fortune 500). Both companies are due to post results before the market open.

Tech: Stocks to watch include Apple (AAPL, Fortune 500), which posted record third-quarter earnings late Tuesday that blew past analysts' expectations. The company's results were boosted by stellar iPhone sales. The stock edged up about 3% in pre-market trading.

Yahoo (YHOO, Fortune 500) reported a decline in revenue after the market close Tuesday. Its shares fell 3% before hours.

Global markets: Asian stocks extended their rally, with Tokyo's Nikkei index up nearly 1%. European markets dipped in midday trading.

Money and oil: The dollar rose against the euro and the British pound, but slipped versus the yen. The price of oil fell 85 cents a barrel to $64.76. 

NEW YORK (CNNMoney.com) -- Stocks finished higher Tuesday -- with the Dow industrials ending at a 6-month high -- after a volatile session in which investors weighed better-than-expected corporate earnings with Federal Reserve Chairman Ben Bernanke's warning that the economic recovery would be slow.

The Dow Jones industrial average (INDU) ended up 68 points, or 0.8%, closing at its highest level since Jan. 6.

Meanwhile, the broader S&P 500 (SPX) index tacked on 3 points, or 0.4%, its highest close in 8 months.

The tech-laden Nasdaq composite (COMP) added 7 points, or 0.4%, marking the index's 10th consecutive day of gains, and the longest streak of winning sessions the Nasdaq has had in 12 years. The last time the Nasdaq posted 10 winning sessions in a row was July 1997, according to a Nasdaq spokesperson.

After the closing bell, computer and cellphone maker Apple (AAPL, Fortune 500) posted second-quarter profit of $1.35 per share on revenue of $8.34 billion. That easily beat Wall Street estimates of $1.17 per share earnings and revenue of $8.2 billion, according to a consensus estimate of analysts polled by Thomson Financial.

Apple shares rose 3% in after-hours trading.

Also after the close, search engine Yahoo (YHOO, Fortune 500) said revenue fell by 13% from the same quarter a year earlier to $1.57 billion. After taking out traffic acquisition costs, however, Yahoo posted sales of $1.14 billion, in line with analysts' expectations.

Yahoo stock slipped 4% after hours.

On Tuesday, Caterpillar (CAT, Fortune 500) rose 8% after issuing a positive outlook, although even bigger gains were pared after executives warned in a conference call that waning demand would make for a tough third quarter.

"We have made a tremendous move and a tremendous sentiment change in the last six trading days, since Monday of last week," said Kenny Landgraf, principal and founder of Kenjol Capital Management.

Market breadth was mixed. On the New York Stock Exchange, advancers beat decliners 8 to 7 on volume of 1.21 billion shares. On the Nasdaq, decliners beat advancers 5 to 4 on volume of 2.28 billion shares.

Bernanke: Fed chairman Bernanke, in prepared testimony before a House committee, said the pace of economic decline has "slowed significantly" but the labor market has gotten worse. He cautioned that improvement is uncertain and likely to be gradual going forward.

Investors paid close attention to Bernanke's testimony. "It has been an unprecedented credit crisis and they cut the rates to zero," said Landgraf. "The question is you can't leave them there for ever."

As the economy begins to recover, the central bank will have to pull back. "As things start to get engaged and you get some traction in the economy," he said, "how do you lift interest rates without snuffing out the recovery?"

Prior to his testimony, Bernanke outlined his "exit strategy" from the current low interest rate policy in a Wall Street Journal guest column. Bernanke defended the aggressive roles of the Fed and its ballooning balance sheet in the current crisis, saying "These actions have softened the economic impact of the financial crisis."

Caterpillar: Heavy equipment maker Caterpillar, a gauge of the global economy, said that it is seeing signs of stabilization in the global economy, and that global stimulus efforts -- particularly in China -- are beginning to work.

"A lot of their profits come from overseas and a lot of their expectations are driven by the emerging markets needing to grow," said Joe Clark, managing partner at Financial Enhancement Group.

For the second quarter, Caterpillar posted better-than-expected earnings on sales that fell short of expectations. However, the company said its third quarter would be tough and that it could post a loss for that period and that it would be forced to implement rolling plant closures.

Second-quarter reports: Investors were paying close attention to financial reports from the second quarter for a sense of how companies are managing to navigate the downturn.

Drugmakers Merck and the soon-to-be-acquired Schering-Plough announced second-quarter earnings before the bell. Merck (MRK, Fortune 500) reported earnings per share of 83 cents excluding charges, beating expectations of 77 cents from Thomson Reuters.

Schering (SGP, Fortune 500) reported 46 cents earnings per share excluding charges, which was close to estimates, and up slightly from 45 cents in the year-ago quarter.

On Wednesday, the drumbeat of corporate announcements continues. Investors will look for second-quarter reports from Dow component Boeing (BA, Fortune 500), as well as Delta Air Lines (DAL, Fortune 500), Morgan Stanley (MS, Fortune 500), Wells Fargo (WFC, Fortune 500), and eBay (EBAY, Fortune 500).

CIT: Investors are also watching troubled small business lender CIT (CIT, Fortune 500), which confirmed late Monday that bondholders had extended financing that will keep it afloat.

The market was generally pleased to see the private sector step up to the plate. "When we look back ten years from now," said Landgraf, and investors see that "the sector came forward and helped out their associates here, we are going to say that is a better deal than that government stepping in."

But investors remain uncertain about how long the relief will last as the company faces a difficult restructuring.

Bonds: Treasury prices jumped, with the yield on the benchmark 10-year note falling to 3.46% from 3.61% Monday. Treasury prices and yields move in opposite directions.

Other markets: In global trade, Asian stocks ended the session mixed. Major European markets ended between 1% and 2% higher.

In currency trading, the dollar gained against major currencies, including the euro, British pound and Japanese yen.

U.S. light crude oil settled up 74 cents to $64.72 a barrel on the expiration date for the August contract. The weekly crude oil inventories report from the Energy Information Administration is due Wednesday.

COMEX gold for August delivery fell $1.90 to $946.90 an ounce.

At 7:40 a.m. ET, the S&P 500, the Dow Jones industrial average and Nasdaq 100 futures were higher.

Futures measure current index values against their perceived future performance.

Peter Cardillo, chief market economist for Avalon Partners, said that markets are in a "wait-and-see" mode regarding upcoming earnings and Bernanke's "exit strategy," which he outlined in a Wall Street Journal guest column.

"The market needs more reason to rally, but the rally is not over with," said Cardillo.

Earnings: Wall Street rallied Monday, lifted by optimism about corporate profits for the second quarter.

Several companies are on tap to post financial results Tuesday, including Apple (AAPL, Fortune 500), Caterpillar (CAT, Fortune 500), Coca-Cola (KO, Fortune 500) and Yahoo (YHOO, Fortune 500).

Drugmakers Merck and the soon-to-be-acquired Schering-Plough announced second-quarter earnings before the bell. Merck (MRK, Fortune 500) reported earnings per share of 74 cents excluding charges, a decline from 82 cents in the year-earlier quarter, and short of the 77 cents that was expected by Thomson Reuters.

Schering (SGP, Fortune 500) reported 46 cents earnings per share excluding charges, which was close to estimates, and up slightly from 45 cents in the year-ago quarter.

Texas Instruments (TXN, Fortune 500) reported a quarterly profit late Monday that exceeded Wall Street's forecasts, although the chipmaker gave a wary outlook.

Economy: Investors will be keeping an eye on comments from Bernanke, who heads to Capitol Hill to testify on monetary policy and the economy.

In his column, Bernanke acknowledged the benefits of having lowered the interest rate target for overnight bank lending "nearly to zero" to soften the recession.

"At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road," he wrote.

CIT: Investors are also watching troubled small business lender CIT (CIT, Fortune 500), which confirmed late Monday that bondholders had extended financing that will keep it afloat.

But investors remain uncertain about how long the relief will last as the company faces a difficult restructuring.

Global markets: Asian stocks rose, with Tokyo's Nikkei finishing the session nearly 3% higher. Major European markets edged higher in midday trading.

Oil and money: The price of oil rose 22 cents a barrel to $64.20. The dollar rose against major international currencies, including the euro, yen and British pound.