Major stock fell Tuesday, as a larger-than-expected drop in a closely watched indicator of April manufacturing activity outweighed a rise in May consumer confidence. The market weakness also reflected month-end profit-taking after gains in May, according to Standard & Poor's MarketScope. France's rejection of the European Union constitution also raised some concerns about global economic growth, and drove the euro to a seven-month low against the dollar.
On Tuesday, the Dow Jones industrial average fell 75.07 points, or 0.71%, to 10,467.48. The broader Standard & Poor's 500 index was down 7.27 points, or 0.61%, to 1,191.51. The tech-heavy Nasdaq composite index lost 7.51 points, or 0.36%, to 2,068.22.
Looking ahead to Wednesday's economic news, reports on April construction spending and May auto sales are expected out in the morning.
In economic news Tuesday, the May Chicago purchasing managers index, a measure of manufacturing activity, dropped to 54.1 from 65.6 in April, much lower than the 61.0 to 62.0 reading analysts were expecting. U.S. consumer confidence in May came in at 102.2, up from 97.5 in April, and higher than the forecast of 95.8 to 96.0.
In the energy markets Tuesday, West Texas Intermediate crude oil settled up 12 cents at $51.97 a barrel.
In corporate news Tuesday, aluminium company and Dow component Alcoa (AA) was leading the blue-chip average lower after receiving a subpoena from the Department of Justice related to an investigation into the aluminium fluoride industry.
Insurer American International Group (AIG) filed its 2004 annual report with the Securities and Exchange Commission Tuesday, restating results for 2000 to 2003 and revising 2004 reports. As part of the changes, the company, which is under investigation by regulators for accounting irregularities, cut shareholders equity at the end of 2004 by 2.7% to $80.61 billion and lowered 2004's net income by 11.9% to $9.83 billion.
European Union trade head Peter Mandelson said that the EU will file a countercomplaint at the World Trade Organization saying that Boeing (BA) receives illegal aid, a day after the U.S. decided to take the EU to a legal panel at the WTO over Airbus subsidies.
Treasuries were higher at the end of the day Tuesday, on the fallout from the French rejection of the European Union constitution, the resurgent dollar, and a mixed patch of U.S. economic data, according to Action Economics. The yield on the 10-year benchmark was 4.01.
European stock markets closed lower on Tuesday. London's FTSE 100 index fell 22.30 points, or 0.45%, to 4,964.00, as British May consumer confidence fell to -1 from 0 in April.
Germany's DAX index fell 19.80 points, or 0.44%, to 4,460.63 after a report showed German jobless rate held at 11.8%. Eurozone May economic sentiment also fell to 96.1 from 96.5 in April, and consumer sentiment dropped to -15 from -13.
In Paris, the CAC 40 index, which rose 3 points yesterday after voters rejected the European Union constitution fell 14.14 points, or 0.34%, to 4,120.73 in muted reaction to news that President Chirac appointed Interior Minister Dominique de Villepin as new Prime Minister, replacing Jean-Pierre Raffarin. French consumer confidence also index fell to a record -29 from -24 in March.
Asian markets closed slightly higher Tuesday. In Japan, the Nikkei 225 index rose 10.26 points, or 0.09%, to 11,276.59 on hopes of rising demand from index-tracking funds, after it became one constituent of MSCI's Japan Index after the market closed on Tuesday. In economic news, Japan's seasonally adjusted unemployment rate fell to 4.4% in April, slightly lower than the forecast of 4.5%.
In Hong Kong, the Hang Seng index climbed 21.97 points, or 0.16%, to 13,867.07 on month-end window dressing by institutions.