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NEW YORK (AP) – Relieved investors sent stock prices sharply higher Tuesday as the last of companies’ second-quarter earnings trickled in. But Wall Street was unable to hold its best gains of the day, an expected turn of events given the market’s tenuous state of health.

A positive report on consumer spending contributed to the rally, while disappointing readings on consumer confidence and manufacturing appeared to have little effect on trading.

The Dow finished up 121.09 at 10,522.81, after having risen as much as 191 points in earlier trading.

The market’s broader indicators also moved higher. The NASDAQ composite index advanced 9.29 to 2,027.13, but like the Dow, it fell back from an earlier 39-point rise.

The Standard & Poor’s 500 index picked up 6.71, rising to 1,211.23.

Analysts were divided – upbeat vs. cautious – on how long the gains would last.

“It is the end of the bottoming out phase. It is the next up leg of the next bull market,” said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co.

But others noted that a rally was to be expected with companies just about finished issuing their reports, which have been largely disappointing and often accompanied by warnings of weak results ahead. Rallies will be vulnerable until earnings and the economy show signs of recovery.

“I’ll give it the benefit of the doubt for right now,” said Todd Clark, co-head of trading at WR Hambrecht, of Tuesday’s upturn.

Tuesday’s economic news was also mixed, adding to analysts’ varying opinions.

Wall Street was heartened by the government’s report that consumer spending – which accounts for two-third’s of the nation’s economy – rose 0.4 percent and income increased by 0.3 percent in June.

However, some market observers were more encouraged that the market advanced despite two disappointing reports on consumer confidence and manufacturing activity.

The New York-based Conference Board said Tuesday its Consumer Confidence Index skidded in July for the first time since April, reflecting ongoing worries about jobs and the future of the U.S. economy.

And the Purchasing Management Association of Chicago index of area business activity fell sharply in July. The Chicago survey is watched closely for clues to the index of the National Association of Purchasing Management, which will release July results on Wednesday.

“When the market reacts well in the face of negative news, that is reason to pay attention. … It’s got me thinking that maybe this is something to believe,” Clark said.

Tuesday’s advance was spread across an array of sectors and many stocks’ gains were substantial, signs that investors simply were in the mood to buy even if many companies can’t say if or when business stands to improve. 3M climbed $2.63 to $111.88, Merck rose $1.73 to $67.98 and Intel advanced 77 cents to $29.81. All three are Dow industrials.

Losers included companies that reduced their outlooks for the future. Verizon, which met earnings expectations, fell $1.87 to $54.15 after reducing its outlook for the year.

World Wrestling Federation Entertainment, which offered fiscal 2002 revenue growth targets that suggest weak first-quarter growth, tumbled $2.39 to $10.50.

Advancing issues outnumbered decliners slightly more than 3 to 2 on the New York Stock Exchange. Consolidated volume came to 1.4 billion shares, ahead of the 1.08 billion traded Monday.

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