Stocks End Quarter on a Down Note

Equities slumped Tuesday on a dip in June consumer sentiment. But major indexes posted solid gains for the second quarter

U.S. stocks ended an otherwise stellar second quarter on a down note Tuesday, as major indexes extended losses suffered in overseas markets as a surprise drop in U.S. consumer confidence stoked concerns about the prospects for an economic recovery.

On Tuesday, the 30-stock Dow Jones industrial average finished lower by 82.38 points, or 0.97%, at 8,447.00. The broad Standard & Poor's 500-stock index fell 7.91 points, or 0.85%, to 919.32. The tech-heavy Nasdaq composite index shed 9.02 points, or 0.49%, to 1,835.04.

On the New York Stock Exchange, 17 stocks were lower in price for every 13 that advanced. Nasdaq breadth was 15-12 negative.

In the second quarter, the Dow was up 11%, the S&P 500 gained 15%, and the Nasdaq vaulted higher by 20%.

For the first six months of the year, the Dow was down 3.8%, the S&P 500 was up 1.8%, and the Nasdaq gained 16%.

Treasuries fell in price Tuesday. The dollar index rose. Gold and oil futures fell.

Looking ahead, Wednesday brings the Institute for Supply Management's manufacturing index for June and the May construction spending report.

The market's primary focus this week will be on Thursday's release of two key labor market indicators: the June employment report, and weekly initial jobless claims.

S&P MarketScope expects slow trading for the remainer of the holiday shortened week; U.S. financial markets are closed Friday in observance of the Independence Day holiday.

A report released by the Conference Board Tuesday showed U.S. consumer confidence slipping to 49.3 in June after surging 14 points to 54.8 in May (revised fractionally from 54.9). This breaks a string of 3 consecutive monthly gains, and and puts the index back below 50.0, and slightly lower than its 51.0 mark from a year ago. The present situation index fell to 24.8 from 29.7 (revised from 28.9). It was at 65.4 a year ago. The expectations index fell to 65.5 from a revised 71.5 (was 72.3) in May (and it was 41.4 a year ago). The 1-year inflation median edged up to 5.9% vs. 5.6% in May (7.7% a year ago).

The Chicago purchasing managers' index (PMI) climbed to 39.9 in June from 34.9 in May. The employment index rose to 28.9 from 25.0, while new orders improved to 41.6 from 37.3. Prices paid rose to 36.3 versus 34.9.

"The data are better than expected and add support to forecasts that the recession is bottoming," says Action Economics.

U.S. S&P/Case-Shiller home price index fell 0.56% to 139.2 in April from 140.0 in March for the 20-city composite. On a year-over-year basis, the index improved modestly to a 18.1% decline vs. -18.7% in March. Of the 20 cities measured, 12 posted declines in home prices, paced by a 3.5% drop in Las Vegas. The 10-city composite index fell 0.67% on the month to 150.3, from 151.4. It is down 18.0% year-over-year, and compares to -18.7% in March.

The International Council of Shopping Centers (ICSC) and Goldman Sachs weekly chain store sales index rose 1.6%, the best gain sinde Jan. 31, in the week ended June 27 after being unchanged the week before. On a year-over-year basis, sales also improved by 0.6% after being down 0.9% the week before.

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