closed lower Tuesday as mixed economic data lead to an extension of Monday's larger selloff.
Housing starts rebounded 17% in May and producer prices rose only 0.2%. But industrial production fell 1.1% in May, as capacity utilization slumped to a record low, putting clouds in investors' timetable for an economic rebound.
Wednesday brings May consumer price data, and later this week is the quarterly expiration of options and futures.
On Tuesday, the 30-stock Dow Jones industrial average finished lower by 107.46 points, or 1.25%, at 8,504.67. The broad Standard & Poor's 500-stock index fell 11.75 points, or 1.27%, to 911.97. The tech-heavy Nasdaq composite index dropped 20.20 points, or 1.11%, to 1,796.83.
Treasuries rallied, with the yield on the 10-year note falling to 3.66%. August gold futures were higher at $935.70 per ounce. July Nymex crude oil futures eased to $70.55 a barrel in late trading, erasing earlier gains as the stock market turned negative and the dollar index came off of the day's lows.
European stocks finished mixed, giving up earlier gains after a rise in a closely watched German manufacturing sentiment index to a three-year high. London stocks rose 0.06%, Paris stocks fell 0.17%, and Frankfurt stocks rose 0.02%.
Asian stock markets fell, with Tokyo down 2.86%, Hong Kong lower by 1.80%, and Shanghai off 0.48%.
Shares of Toll Brothers ( (TOL)
) and other homebuilders retreated from earlier gains inspired by the May housing starts news.
In company news Tuesday, Best Buy ( (BBY)
) reported a 15% drop in quarterly profits after restructuring-related write-offs, though that topped expectations and the shares fell 4%.
Tyco Electronics ( (TEL)
) raised its third-quarter sales forecast from $2.35 billion-$2.45 billion to $2.45 billion-$2.55 billion due to improved sales in the consumer-related end markets served by the Electronic Components segment, additional project revenue in the Undersea Telecommunications segment, and foreign currency effects. The company now sees third-quarter adjusted earnings per share from continuing operations of $0.10-$0.17, compared to prior guidance of $0.01-$0.06.
In economic news Tuesday, U.S. industrial production declined 1.1% in May, following a revised 0.7% drop in April (from -0.5%; March's -1.7% was revised down to -1.8%). Capacity utilization fell to a record low 68.3% from a revised 69.0% (was 59.1%). Manufacturing activity dipped 1.0%, with weakness seen in motor vehicles (-7.9%), machinery (-3.4%), computers and electronics (-1.1%. Utility production was off 1.4% following a 0.7% increase in April (revised up from 0.4%). Mining was down 2.1% after a 3.2% decline in April.
U.S. housing starts climbed 17.2% to a 0.532 million-unit annual pace in May, from a revised 0.454 million pace in April (from 0.458 million; March's 0.525 million was revised down to 0.521 million). Single family starts were up another 7.5% after posting modest gains in March and April. The very volatile multi-family starts category rebounded 61.7%. Building permits rose 4.0% to a 0.518 million rate, from a revised 0.498 million (from 0.494 million).
The U.S. producer price index (PPI) rose 0.2% in May, with the core rate, which excludes food and energy prices, down 0.1%, following gains of 0.3% and 0.1%, respectively, in April. Energy prices were up 2.9% after posting declines in March and April. Gas prices rose 13.9% following a 2.6% increase in May. Consumer goods prices edged up 0.3%, paced by gas station sales. Passenger car prices were up 0.1%, while woman's apparel prices declined 0.1%. Residential gas prices fell 4.7%.
Representatives from Brazil, Russia, India, and China -- the so-called "BRIC" countries -- called for a diversified, stable predictable currency system in a draft communique from a meeting on Tuesday. A source with knowledge of the document told Reuters the communique does not mention the role of the U.S. dollar or a supranational currency. It said that emerging economies should have a bigger voice in international financial institutions and called for reform. It called for sweeping reform of the U.N. and supports a bigger role for India and Brazil.