On Tuesday, the blue-chip Dow Jones industrial average ended down 62.05 points, or 0.67%, to 9,204.46. The broader Standard & Poor's 500 index shed 7.24 points, or 0.73%, to 989.28. The tech-heavy Nasdaq composite index was down 3.96 points, or 0.23%, to 1,731.40.
Ealier in the session, rumors that Saddam Hussein had been captured after a key bodyguard of the deposed Iraqi strongman was seized overnight fueled a short-lived rebound in stocks. The Pentagon has no further information on the capture rumors, says economic research outfit MMS International.
Meantime, Cisco Systems (CSCO
) provided some leadership after a Lehman Brothers analyst suggested the networking giant would post "solid" fourth quarter results next week.
But in the end, lackluster consumer confidence data won the day. The Conference Board's July U.S. Consumer Confidence index slumped to 76.6, the lowest since March, down from 83.5 in June. Expectations led the decline falling to 86.4 from a revised 96.4. Present conditions fell to 61.9 from a revised 64.2. "It appears that ongoing weakness in the labor market and some recent softness in the stock market have weighed on consumers' outlook," says MMS.
Companies continue to report June-quarter earnings results. Dow industrials member DuPont (DD
) posted second-quarter earnings from operations of 62 cents, vs. 71 cents one year earlier.
Another Dow member fast-food giant McDonald's (MCD
) reported second quarter earnings of 37 cents per share, versus 39 cents one year ago, despite an 11% increase in revenue to $4.28 billion.
More earnings updates, though the season is nearly over, will influence the market Wednesday. CVS Corp. (CVS
), Duke Energy (DUK
), AES Corp (AES
) and Aetna (AET
Among the Dow industrials components scheduled to report later in the week: ExxonMobil (XOM
), Disney (DIS
) and Procter & Gamble (PG
), all expected on Thursday.
The Fed's beige book will be released Wednesday at 2 p.m. ET and is expected to again indicate signs of increased economic activity, says MMS. However, given the more optimistic tenor of the June 25 FOMC statement, the report may be a little more upbeat on growth.
Other market-moving data events toward the end of the week include: a refunding announcement from the Treasury, initial jobless claims, preliminary GDP figures for the second quarter and the Chicago PMI. Friday's employment report gains in importance for the market after Tuesday's confidence report showed weakness in the jobs components.
Treasuries resumed falling in price Tuesday after a brief corrective bounce on weaker than expected consumer confidence. The coupon curve remained steep and the bond surged a half point on the data, but duration-related selling jumped on the price recovery and stamped out its embers before it could catch fire, says MMS.
Dallas Federal Reserve President Robert McTeer reiterated that the Fed shouldn't have to employ unconventional easing tactics. He believes the "stars are aligned" for a pickup in the economy. Bonds have already reacted to the Fed's dismissal of the notion that they might resort to buying Treasuries outright if the Fed funds rate approached zero, and further negative reaction is unlikely.
In other economic news, the retail chain store sales index fell 0.3% for the week ended July 26, breaking a three-week string of gains. Sales in food, pharmacy and seasonal items led the pace. "Despite the headline decline, sales momentum remains healthy with the year over year pace accelerating to 2.3% from 2.2%," says MMS.
European markets finished mixed Tuesday, despite a positive morning on the back of some good corporate earnings reports, including profits at the high-end of forecasts for oil giant BP.
In London, the Financial Times-Stock Exchange 100 ended down 11.8 points, or 0.28%, to 4,137.00. The index was held back by disappointing results from tobacco company BAT, which reported a decline in first-half profits, while British insurer Prudential cut its dividends. British consumer credit grew in June at a record pace, while house price inflation declined for the fourth month.
In France, the CAC 40 finished 22.54 points lower, or 0.71%, to 3,142.39. France Telecom, Alcatel, and Orange traded higher. In Germany, the DAX Index turned up 10.35 points, or 0.30%, to 3,428.12. The company Celanese was higher as its second quarter earnings per share rose more than fourfold.
In Asia, major stock indexes were mixed. Japan's Nikkei index finished down 5.6 points, or 0.06%, to 9,834.31. Meanwhile, Hong Kong's Hang Seng index rose 63.72 points, or 0.63%, to 10,198.60.