Stocks mostly slide on mixed data
NEW YORK -- Stocks mostly fell Tuesday as mixed reports on home prices and consumer confidence give investors little incentive to step into the market.
A decision by IBM Corp. to double its stock-repurchase plan gave a boost to the Dow Jones industrials, but the Nasdaq composite index fell after Baidu Inc., the Chinese Internet search company, warned its revenue could take a hit as it switches its advertising system. Falling stocks outpaced those that rose.
Bond prices added to their gains after strong demand at a government debt auction.
Stocks began the day higher following a report that home prices in 20 major metropolitan markets rose for the third straight month in August. The Standard & Poor's/Case-Shiller home price index gained 1 percent in August from July.
Home prices fell 11.4 percent from a year earlier, which was a smaller drop than economists polled by Thomson Reuters predicted. The year-over-year slide has slowed since February, indicating the housing market is stabilizing.
That wasn't enough to offset new worries that consumers might not be in a mood to spend this holiday season. The Conference Board said its Consumer Confidence Index fell unexpectedly to 47.7 in October, its second-lowest reading since May. Analysts predicted a reading of 53.1.
"Consumer confidence is not great," said Stephen Carl, head of equity trading at The Williams Capital Group in New York. "Some of the housing numbers showed a little bit of an improvement but on the whole you've got a long way to go."
Worries about consumers have been around for a while, but they took some of the sheen off corporate profit reports for the July-September quarter which have been coming in ahead of expectations.
"When I look at the consumer, I think that is the next big test," said Dave Hinnenkamp, chief executive KDV Wealth Management in Minneapolis. "We've passed a big test on the earnings front."
In midafternoon trading, the Dow Jones industrial average rose 32.12, or 0.3 percent, to 9,900.08. The broader Standard & Poor's 500 index fell 1.04, or 0.1 percent, to 1,065.91, while Nasdaq fell 21.05, or 1 percent, to 2,120.80.
Stocks have fallen in four of the past five days as investors look for catalysts that could extend the market's climb. The S&P 500 index is up 57.7 percent since March.
Bond prices rose after a Treasury Department auction of $44 billion in two-year notes drew robust demand. That pushed yields lower. The yield on the two-year note rose fell to 0.95 percent from 1.04 percent late Monday. The yield on the benchmark 10-year Treasury note fell to 3.48 percent from 3.56 percent late Monday.
Stocks have struggled in the past week as the dollar has been strengthening, which often pushes the prices of commodities lower. Commodities are traded in dollars, so a stronger dollar makes it more expensive for foreign investors to buy into the market.
The dollar rose again Tuesday but didn't steer the stock market as it had in recent days.
The Dow fell 104 points Monday after a drop of about the same size Friday. It was the first consecutive triple-digit loss for the Dow since mid-June.
Fears of an overheated market have also been contributing to the slide in the week since major indexes hit their highest levels in more than a year. The market has been surging with little pause since March, and analysts have been saying for months that stocks are due for a consolidation.
Investors are also looking to the government's first reading on economic output for the July-September quarter. The report on gross domestic product due Thursday is expected to signal an end to the recession that began in December 2007. Economists predict the economy grew at an annual rate of 3.2 percent in the quarter, according to Thomson Reuters.
Joe Battipaglia, market strategist for private client group at Stifel Nicolaus, said recent economic data don't support arguments for a fast recovery in the economy, nor do they suggest a recovery would be weak enough to push stocks back down to the 12-year lows of March.
"We are in what I would call purgatory right now where the U.S. economy is rather limp," he said.
The dollar was mixed against other currencies.
Crude oil rose 77 cents to $79.45 per barrel on the New York Mercantile Exchange.
IBM, one of the 30 companies that make up the Dow, rose after it added $5 billion to its stock repurchase fund. The total now stands at $9.2 billion. The stock advanced 77 cents, or 0.6 percent, to $120.88.
Baidu's American Depositary shares slid $55.54, or 12.8 percent, to $377.43 after it laid out revenue projections for its switch in ad systems.
Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 813.7 million shares compared with 832.7 million shares traded at the same point Monday.
The Russell 2000 index of smaller companies slid 5.56, or 0.9 percent, to 588.12.
Britain's FTSE 100 rose 0.2 percent, Germany's DAX index fell 0.1 percent, and France's CAC-40 slipped less than 0.1 percent. Japan's Nikkei stock average fell 1.5 percent.