Stocks mostly fell Tuesday after the Conference Board said consumer confidence weakened more than expected in July. The Dow Jones industrial average fell about 40 points in afternoon trading as investors worried that consumers' waning confidence and the rising unemployment rate would hamper the economy's ability to rebound from the longest recession since World War II.
But even without the consumer confidence report, analysts have been anticipating some pullback after the market soared 11 percent in just two weeks on surprisingly strong corporate profit reports. The latest run restarted a rally that began in March but faltered in mid-June on lackluster economic data.
Trading was cautious Tuesday after the latest round of earnings reports. Office Depot Inc. said its second-quarter loss widened and results fell short of analysts' expectations and luxury handbag maker Coach Inc. said shoppers showed up at factory outlet stores but held off buying pricier items at U.S. department stores.
The third upbeat reading on the housing market since last week helped temper the market's disappointment. The S&P/Case-Shiller Home Price index indicated that home prices posted their first monthly increase since the summer of 2006. Prices in major metropolitan markets rose 0.5 percent in May from April.
The report is the latest since last week to signal that home sales are stabilizing.
Adam Gould, senior portfolio manager at Direxion Funds in New York, said the rally remains intact because investors are jumping in when stocks retreat. That helped pull stocks off their afternoon lows.
"There are lot of people that missed this rally," he said. "When it looks like it's not selling off anymore guys start rushing in."
"What we're seeing -- the action in the market -- is typical of the beginnings of a bull market where you have these dips and people rush in to buy stocks again," says Peter Cardillo, chief market strategist at Avalon Partners. "So it's a good indication that the rally has further to go on the upside."
The Dow Jones Industrial Average fell 11.79 points, or 0.1%, to 9096.72, and the S&P 500 was off by just 2.56 points, or 0.3%, at 979.62. The Nasdaq gained 7.62 points, or 0.4%, to 1975.51.
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