Stocks Fall as Consumer Confidence Dips

Investors Tuesday took profits from the previous session's rally. Wednesday brings an update on second-quarter GDP

U.S. stock indexes closed lower Tuesday as weaker-than-expected consumer confidence data offset a better-than-expected profit posted by Walgreen (WAG) and fresh signs of stabilization in the housing market. The market's pullback erased some of the gains from Monday's M&A-inspired rally and came as investors squared positions with an eye on the end of the third quarter.

On Tuesday, the 30-stock Dow Jones industrial average closed lower by 47.16 points, or 0.48%, at 9,742.20. The broad Standard & Poor's 500-stock index fell 1.27 points, or 0.12%, to 1,061.71. The tech-heavy Nasdaq composite index shed 5.07 points, or 0.24%, to 2,125.67.

On the New York Stock Exchange, 16 stocks were higher in price for every 14 that declined. Breadth on the Nasdaq was 14-11 negative.

Treasuries were mixed. The dollar index was higher. Gold and crude oil futures weakened.

Some investors are fearful that final second-quarter U.S. gross domestic product will be revised lower on Wednesday, damaging the out look for the economic recovery outlook for the fourth quarter and next year, says S&P MarketScope.

Bucking the market's drop was Dow component Boeing (BA) rallied on news rival Airbus delayed delivery of a super jumbo jet.

Standard & Poor's Ratings Services downgraded the counterparty credit rating bond insurer MBIA (MBI) to junk status, knocking its shares, and those of other industry players, lower.

SEC regulators are exploring new regulations for the multitrillion-dollar securities-lending market, the first major step regulators have taken in the area in decades, according to a Wall Street Journal report. SEC Chairman Mary Schapiro said she wants to shine a light on the "opaque market." After many large investors lost millions in last year's credit crunch, she said, "we need to consider ways to enhance investor-oriented oversight." The SEC is holding a public round table today to explore several issues around securities lending, which has expanded into a big moneymaker for Wall Street firms and pension funds.

The Journal reported Tuesday that big Wall Street firms from Vanguard Group to Goldman Sachs are lining up against new rules to restrict short-selling under consideration by the SEC. Short-selling regulations have become a political hot potato, with many investors blaming the 2007 removal of the uptick rule as a factor behind the financial crisis.

Japan's finance minister said Tuesday the government may step into the foreign exchange market, backpedaling his recent comments suggesting he is against intervention to influence the currency's direction, according to an Associated Press dispatch. Finance Minister Hirohisa Fujii told reporters that "If (exchange rates) move abnormally, we could take appropriate measures for our national interest." Though he did not specify what measures could be taken, he was widely believed to have meant a market intervention.

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