Retail sales report nudges stocks higher

Stocks closed mostly lower Tuesday after trading slightly higher for much of the day.

Earlier, investors were energized by a surprise gain in retail sales in July. That report provided evidence that American shoppers are still spending even as their counterparts in Europe and Asia slow down.

The Dow Jones industrial average closed up 2.71 points at 13,172.14. It was up as much as 53 points at midday. The S&P 500 index lost 0.1 percent to 1,403.93 and the Nasdaq composite index fell 0.18 percent to 3,016.98.

JJ Kinahan, a strategist at online broker TD Ameritrade, said the retail sales increase wasn't enough to justify a significant upward move in the stock market.

"Consumers are still cautious," Kinahan said. "Even numbers that are marginally better look good when compared to a trough."

Stocks were held back by reports that U.S. companies barely increased their inventories in June. The slower restocking trend could act as a drag on overall economic growth. When businesses place fewer orders, factory production slows.

"While the economy isn't slipping further, it leaves open the possibility of the Fed's support for the economy to grow at a better rate,"said Peter Cardillo, chief market economist at investment bank Rockwell Global Capital. -- AP