NEW YORK News that consumers are more pessimistic put the stock markets rally on hold.
Stocks fell modestly Tuesday after three days of big gains. The Dow Jones industrial average rose 12 points for its fourth consecutive advance, but the gain largely was because of a jump in DuPont Co. after the chemical maker reported strong earnings. Broader market indexes fell slightly, and there were more losers than gainers on the New York Stock Exchange.
The Conference Boards report that its Consumer Confidence Index fell to 50.4 from Junes revised reading of 54.3 distracted investors from another batch of upbeat earnings reports. The market had expected the index to come in at 51.
Consumer confidence has fallen in recent months, as people have waited in vain for a turn-around in the job market. That has made many consumers hesitant to spend and in turn raised concerns about the economic recovery. Most retail stocks fell after the confidence number was released.
Companies have a very different take on the economy from consumers. Chemical maker DuPont on Tuesday joined the growing number of big corporations that have raised their earnings forecasts. DuPont also easily beat analysts predictions for its second-quarter profit and revenue. The companys stock rose $1.39, or 3.6 percent, to $40.38, and accounted for 10.52 points of the Dows advance.
Investors have been torn over the last few months between buying on companies upbeat reports and selling on government and private sector numbers that keep pointing to a slowing of the economy.
Investors are really uncertain whether to focus on the underlying economy or earnings, said Tyler Vernon, principal and portfolio manager at Biltmore Capital Advisors.
Although earnings had investors attention the last two weeks, the occasional economic number, such as Tuesdays consumer-confidence survey, can trump companies results, Vernon said. When earnings reports are done, unsettling data about jobs, housing and consumer spending will dominate trading, and may lead to more selling.
John Brady, a senior vice president at MF Global in Chicago, said there is little thats likely to turn around consumer confidence in the near future. Consumers wont become more optimistic until they see a drop in unemployment and clear signs that employers are hiring.
I dont know what turns around confidence aside from jobs growth, Brady said.
The Dow rose 12.26, or 0.1 percent, to 10,537.69 after gaining 405 points the last three days on strong earnings and forecasts. The Dow has surged in July, rising almost 8 percent. The sharp gains helped push the index back into the black for the year on Monday.
The Standard & Poors 500 index fell 1.17, or 0.1 percent, to 1,113.84, while the Nasdaq composite index fell 8.18, or 0.4 percent, to 2,288.25.
Losing stocks were ahead of gainers by about 4 to 3 on the New York Stock Exchange, where volume came to 4.7 billion shares, up from Mondays 4.1 billion.
Bond prices fell, sending their yields higher. The yield on the 10-year Treasury note rose to 3.05 percent from 2.99 percent late Monday. That yield helps set interest rates on mortgages and other consumer loans.