NEW YORK — A surprise drop in consumer confidence tripped up investors Tuesday, a day after a round of corporate takeovers set off a steep market rally.
Stocks fell after the Conference Board said its consumer confidence index fell in September. Economists had been expecting a reading of 57; instead it came in at 53.1.
The private research group said consumers are still worried about losing their jobs. Many analysts warn a turnaround in the economy won't hold if consumers don't start picking up spending and employers add jobs.
The report offset early enthusiasm over an increase in home prices.
Stocks broke a three-day losing streak Monday after news of several big acquisitions signaled to investors that corporate America is feeling more confident about theeconomy and willing to take on more risk.
"You had these M&A deals make people feel better about growth prospects and valuations," said Nick Kalivas, vice president of financial research and senior equity index analyst at MF Global. "We don't have any follow-through M&A, today and the market really lacks a forward catalyst."
The Dow Jones industrials fell 47.16, or 0.5 percent, to 9,742.20, chipping away part ofMonday's 124-point gain. The S&P 500 index slipped 2.38, or 0.2 percent, to 1,060.60, and the Nasdaq composite index fell 6.70, or 0.3 percent, to 2,124.04.
The Russell 2000 index of smaller companies fell 2.77, or 0.5 percent, to 610.45.
Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to 4.96 billion shares, compared with 3.81 billion shares Monday when trading was light because of the Jewish holiday Yom Kippur.
The Standard & Poor's/ Case-Shiller home price index of 20 major cities provided the latest encouraging sign for the housing market. The index rose 1.2 percent in July from June. Home prices are still 13.3 percent below July a year ago, but the annual drops have slowed in all 20 cities for the past six months.
In other trading, bond prices mostly fell after five days of gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.30 percent from 3.28 percent late Monday.
The dollar was mixed against other major currencies, while gold edged higher.
Overseas, Britain's FTSE 100 fell 0.1 percent, Germany's DAX index lost 0.4 percent, and France's CAC-40 slipped 0.3 percent. Japan's Nikkei stock average rose 0.9 percent.
Business, Pages 26 on 09/30/2009