Closing Update:Spooked By American Retail Sales Data, European Credit Downgrades

U.S. stocks were mixed Tuesday after a lower-than-expected reading on U.S. retail sales reminded investors that America's economic recovery is on shaky footing. Also contributing to the mixed trade was the spill-over of negative sentiment from Monday's credit rating downgrades by Moody's.

Moody's Investor Service late Monday cut the debt ratings of six European countries, with Spain downgraded to A3 from A1, Italy to A3 from A2 and Portugal to Ba3 from Ba2, all with negative outlooks. Slovakia, Slovenia and Malta also had their ratings lowered. It also placed France, the U.K., and Austria on negative watch, with the agency stating "the uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework" as the reason for the change.

Also working to keep a lid on stocks was weak U.S. retail sales. The Commerce Department reported a 0.4% rise in retail sales during January. That was half the 0.8% increase in the median forecast of economists surveyed by Bloomberg News. Sales excluding cars climbed 0.7%, more than projected and the biggest gain since March.

In company news, MedAssets (MDAS) soared on rumors that the company may be looking to explore leveraged buyout opportunities. According to DealReporter, MedAssets has hired JPMorgan Chase to help it explore a possible buyout.

DryShips (DRYS) climbed in afternoon trading amid progress on the economic crisis in Greece. The stock is changing hands at a furious pace with volume recently at 48.5 mln shares. Average daily volume is 6 mln shares.

Both oil and gold suffered losses. Crude for March delivery fell 0.2%, to close at $100.74 a barrel on the New York Mercantile Exchange. Gold futures posted their third straight loss. Gold for April delivery fell $7.20, or 0.4%, to settle at $1,717.70 an ounce on the Comex division of the New York Mercantile Exchange.

Here's where markets stood at end-of-day:

Dow Jones Industrial Average up 4.24 (+0.03%) to 12,878.28

S&P 500 down 1.27 (-0.09%) to 1,350.50

NASDAQ Composite up 0.44 (+0.02%) to 2,913.83

GLOBAL SENTIMENT

Nikkei up 0.59%.

Hang Seng up 0.15%.

Shanghai Composite down 0.30%.

FTSE-100 down 0.10%.

UPSIDE MOVERS

(+) RAX, Tops $50 a share for first time as Q4 results surprise.

(+) IMAX, Building four new specialty theatres in China.

(+) ASGN, Tops Q4 Estimates and Forecasts Q1 Above Street.

(+) TAL, Q4 Income Beat Estimates.

DOWNSIDE MOVERS

(-) CPLA, Reports Worse-than-expected Q4 results.

(-) GT, Forecasts slowing growth.

(-) MAS, Downgraded to Underperform from Market Perform at Raymond James.