US stocks regained ground today as the market’s cautious optimism was restored by government data showing only modest inflation, better-than-expected corporate earnings, announcements of two merger deals and the report of a third.

An unsettling report on consumer incomes set off a spate of profit-taking on Wall Street today as investors worried that a tepid economy would erode companies’ third-quarter earnings. Another drop in oil prices failed to shake the gloom from the market.