Stocks fell modestly in morning trading Tuesday as investors are showing a little more caution amid mixed earnings reports after the market’s huge two-week rally.
Investors are following their counterparts overseas in sending major indexes lower.
“There is uncertainty about how fast the rally can go and how far it can go,” said Robert Phillips, a managing director at Spectrum Management Group of Raymond James & Associates. That cautious nature could contribute to a slight pullback in the market over the coming days, he added. Over the past two weeks, markets had rallied about 11 percent.
Mixed earnings reports continued Tuesday morning as Viacom Inc. reported a sharp decline in profit and Valero Energy Corp. posted a quarterly loss. However, both results were slightly better than expectations.
Markets had been surging as many major compose profits were handily beating expectations and outlooks were improving. With more mixed results in recent days, stocks have taken a pause in their march higher.
In early trading, the Dow Jones industrial average is down 18.59, or 0.2 percent, at 9,089.92. The Standard & Poor’s 500 index is down 3.45, or 0.4 percent, at 978.73, while the Nasdaq composite index is down 2.45, or 0.1 percent, at 1,965.44.
Aside from the ongoing earnings reports, investors are awaiting key data on consumer confidence. The Conference Board’s consumer confidence report is expected to show Americans remain worried about current economic conditions and the rise in unemployment. Consumers are critical to the economic recovery because their spending accounts for more than two-thirds of all economic activity.
The consumer confidence reading could be “slightly above expectations” based on recent retail sales figures, Phillips said. Economists project a July reading of 49 for the Conference Board’s Consumer Confidence index. The report is due at 10 a.m. EDT.
A better-than-expected reading on confidence could return some of the positive momentum to the market that had been seen the last two weeks amid strong earnings results, Phillips added.
Like consumer confidence, investors are also closely monitoring the housing market for signs of stability.
The S&P/Case-Shiller Home Price index issued Tuesday showed prices in major metropolitan markets rose 0.5 percent compared with the previous month, the first monthly gain since the middle of 2006. It also showed that year-over-year declines slowed for the fourth consecutive month in May, falling 17.1 percent.
The results are further indication of a stabilizing housing market, following recent data that showed better-than-expected home sales in recent days.
Copyright 2009 The Associated Press.
