NEW YORK — The Dow Jones industrial average swept past 14,000 for the first time Tuesday after a relatively tame inflation report gave investors reason to extend an extraordinary — but perhaps questionable — Wall Street rally.

The stock market's best-known indicator crossed 14,000 in the first half-hour of trading but failed to close above that level; it did, however, manage its fourth record close in as many sessions. The Dow rose as high as 14,021.95, having taken just 57 trading days to make the trip from 13,000.

Stocks have risen fairly steadily since the spring amid a continuum of buyout news and evidence that despite higher fuel prices and the ongoing problems in the housing market and mortgage lending industry, consumers are spending and companies remain optimistic about the future. With the Federal Reserve ever vigilant about inflation, any news that prices are rising at a moderate pace has added to the market's momentum, as it did Tuesday.

———

WHOLESALE INFLATION RECEDED IN JUNE

WASHINGTON — Wholesale inflation posted a better-than-expected reading as both food and energy costs retreated in June. Industrial production rebounded as well, but homebuilders' confidence fell to the lowest level in 16 years as the housing slump persisted.

Reports released Tuesday painted a picture of an economy that is emerging from last winter's severe slowdown despite the continued weakness in housing. And in what will be welcome news at the Federal Reserve, the recent acceleration in inflation caused by a surge in energy and food costs appears to be abating.

The Labor Department's Producer Price Index fell by 0.2 percent last month following a 0.9 percent surge in May. It was the first decline since January and a much better showing than the small rise that had been expected. Gasoline prices fell for the first time since January and food costs dipped for a second month in a row.

———

GAS PRICES FALL

NEW YORK — Gas prices dropped a cent at the pump overnight, following a futures market that has plunged more than 25 cents a gallon over five days on news of growing inventories and refineries returning to service.

Oil prices slid lower after rising above $75 earlier on concerns about disruptions in supplies of the light, sweet crude that is most in demand by refineries as they ramp up their operations to produce more gasoline. Trading across the energy futures complex was choppy, with prices changing direction several times.

Analysts have been mystified by the different directions oil and gasoline futures have taken over the past several Nymex sessions, predicting that one contract was bound to follow the lead of the other at some point.

The national average price of a gallon of gas dropped a cent overnight to $3.04, according to AAA and the Oil Price Information Service.

———

YAHOO 2Q PROFIT DIPS SLIGHTLY

SAN FRANCISCO — Yahoo Inc.'s second-profit slipped slightly while revenue growth remained lackluster, extending a malaise that prompted the Internet icon to replace its chief executive recently.

The Sunnyvale-based company said Tuesday that it earned $160.6 million, or 11 cents per share, during the three months ended in June. That represented a 2 percent decline from net income of $164.3 million, or 11 cents per share, at the same time last year.

It marked the sixth consecutive quarter in which Yahoo's profit has dropped from the previous year.

Revenue for the period totaled $1.7 billion, an 8 percent improvement from last year. But the overall online advertising industry has been growing at a double-digit pace, with online search leader Google Inc. leading the way.

———

INTEL 2Q PROFIT LEAPS 44 PERCENT

SAN JOSE, Calif. — Intel Corp. said Tuesday its second-quarter profit jumped 44 percent on strong sales of microprocessors even as the company faced fierce competition that pushed prices lower.

After hitting a new 52-week high during regular session trading, Intel's stock plunged more than 4 percent in after-hours trading.

The Santa Clara-based chip maker's net income for the three months ended June 30 was $1.28 billion, or 22 cents per share, compared with $885 million, or 15 cents per share during the same period last year.

Were it not for certain one-time tax gains, Intel's profit for the latest quarter would have been lower by 3 cents per share. Analysts surveyed by Thomson Financial were expecting Intel to earn, on average, 19 cents per share.

———

HOME BUILDERS' OUTLOOK SINKS TO 16-YEAR LOW

WASHINGTON — A key measure of industry sentiment on the U.S. market for new homes fell to its lowest point in more than 16 years, a trade group said Tuesday, as builders struggled with rising inventories of unsold houses across the country.

The National Association of Home Builders/Wells Fargo housing market index, which tracks builders' perceptions of current market conditions and expectations for home sales over the next six months, fell to 24 this month, the lowest reading since January 1991, the NAHB said.

Wall Street economists had expected a reading of 27, according to the consensus forecast of economists surveyed by Thomson/IFR.

———

JOHNSON & JOHNSON 2Q PROFIT UP 9 PERCENT

TRENTON, N.J. — Healthcare products maker Johnson & Johnson on Tuesday posted a 9 percent increase in second-quarter profit, as a big sales boost from buying Pfizer Inc.'s consumer health products line offset a continuing decline in sales of its key stent and a top drug.

Johnson & Johnson shares fell $1.15, or 1.8 percent, to $62.65 in afternoon trading.

The New Brunswick, N.J.-based maker of contraceptives, contact lenses, prescription drugs and baby products reported net income of $3.08 billion, or $1.05 per share, up from $2.82 billion, or 95 cents a share, a year earlier.

The consensus forecast of analysts surveyed by Thomson Financial was for earnings of $1 per share. Those estimates typically exclude one-time items.

Sales totaled $15.13 billion, up from $13.36 billion a year earlier. Analysts had been expecting sales of $15.06 billion.

———

MERRILL LYNCH 2Q PROFIT SEES 30% BOOST

NEW YORK — Merrill Lynch & Co., the nation's largest retail brokerage, on Tuesday said stronger investment banking results and fees from stock transactions boosted second-quarter profit by 30.2 percent from a year earlier.

Profit after paying preferred dividends rose to $2.07 billion, or $2.24 per share, from $1.59 billion, or $1.63 per share, in the year-ago period. Revenue rose 19 percent to $9.73 billion from $8.17 billion.

Robust performance from investment banking fees and sharp overseas growth pushed results above Wall Street projections for earnings of $2.02 per share on revenue of $9.25 billion, according to analysts polled by Thomson Financial.

Merrill Lynch's results come as investment banks grapple with the mortgage-market fallout that led to the near-collapse of two hedge funds managed by Bear Stearns. Despite this, it appears that Chief Executive Stanley O'Neal will still be able to produce the company's fourth straight year of record earnings.

———

FEES BOLSTER WELLS FARGO NET

SAN FRANCISCO — Wells Fargo & Co. raked in more service fees and milked customer deposits to boost its second-quarter profit by 9 percent, sticking to a familiar formula that paid off even as more households struggled to pay their bills.

Two smaller rivals, U.S. Bancorp and KeyCorp, didn't fare quite as well in other banking results released Tuesday, but both steered clear of the unnerving losses that have plagued several other lenders in recent months.

The reports provided investors with their first look at how major banks fared during the spring — a period marked by deepening loan problems as rising interest rates, declining home values and higher gas prices strained consumer budgets.