Stocks finished lower in Tuesday's session as crude oil futures closed at a record high and consumer spending fell more than Wall Street expected.
The Dow Jones industrial average lost 58.92 points, or 0.58%, to 10,120.24. The broader Standard & Poor's 500 index shed 6.93 points, or 0.63%, to 1,099.69. The tech-heavy Nasdaq composite fell 32.67 points, or 1.73%, to 1,859.42, paced by declines in semiconductor and Internet software issues.
Crude oil prices finished above $44 a barrel late Tuesday on ongoing worries over scarce supplies. OPEC President Purnomo Yusgiantoro said the cartel had no additional supplies immediately available. On Monday, Algerian Oil Minister Chakib Khelil said OPEC had done all it could to stem rising oil prices. Energy shares rose on the news, while airline stocks declined.
In economic data, the latest report on personal consumption showed a sharp drop of 0.7% in June after a rise of 1% in May. Adjusted for inflation, spending plunged 0.9%, the lowest level in three years. Personal income fell 0.7% in June after rising 1% in May. That figure was expected to show a rise of 0.2% after a 0.6% gain in May.
"Widely anticipated sequential improvements by consumer spending and GDP will not be great enough to avoid a year-over-year slowing by both categories," according to economists at Moody's Investors Service.
In the latest earnings news, industrial conglomerate Tyco International (TYC) reported 63% higher quarterly profit with help from strength in its electronics and engineering businesses.
Luxury goods retailer Coach (COH) said fourth-quarter profit more than doubled on better operating margins and higher sales. The company also raised its fiscal 2005 guidance.
Several companies in the tech sector issued guidance. Software company BEA Systems (BEAS) said it expects to report revenue and earnings for the second quarter in line with analysts' forecasts of 8 cents in earnings per share and 8 cents $267 million in revenues.
Software maker Adobe Systems (ADBE) raised its profit forecast on strong demand for its Photoshop and document-sharing software. It raised its revenue target to a range of $380 million to $400 million and boosted its earnings per share forecast to a range of 36 cents to 41 cents for the third quarter ending Sept. 3.
Online travel agency Priceline.com (PCLN) said third-quarter earnings would fall below Wall Street expectations. A shift to non-auction sales continues to incur higher marketing costs for the company.
In other tech news, Web portal Yahoo (YHOO), in a bid to attract more local advertising and compete with a similar effort started by Google, launched a pilot of a local search engine that gives users phone numbers, maps, ratings and reviews of various services.
Shares in telecom concern Qwest Communications International (Q) lost ground after it reported a wider second-quarter loss hurt by lower sales of local service and charges for job cuts and legal costs.
Auto sales in July ticked higher after a slowdown in June. Amid high incentives and low interest rates, analysts figure light vehicle sales industrywide hit a seasonally adjusted annual rate between 17.1 million and 17.5 million for the month.
On Wednesday, investors get earnings updates from Dean Foods (DF), Polo Ralph Lauren (RL), and Tommy Hilfiger (TOM)
In economic reports, investors will get reports on mortgage applications, factory orders in June and the non-manufacturing ISM index in July.
U.S. Treasuries finished higher in price as traders eyed a shortfall in consumer spending and expectations of solid updates on job growth and the services sector in July. The July employment update is due Friday and the services sector report for the month is due Wednesday.
An announcement on a sale of three-, five- and 10-year notes is due at 9 a.m. ET on Wednesday.
European stocks finished higher in Tuesday's session. In England, the FTSE 100 index gained 14 points, or 0.32%, to 4,429.7 as gains in oil concerns BP and Shell more than offset weak financials like Royal Bank of Scotland.
In Germany, the Dax index gained 14.61 points, or 0.38%, to 3,877.32. In Paris, the CAC 40 index rose 27.01 points, or 0.%, to 3,650.8.
Asian markets ended mixed. In Tokyo, stocks fell for a second straight session as investors worried over oil prices and terror threats. The Nikkei 225 index fell 81.67 points, or 0.73%, to 11,140.57. In Hong Kong, the Hang Seng index added 155.73 points, or 1.28%, to 12,357.12.