Stocks fall as market absorbs mixed news on home prices and consumer confidence

Drop in consumer confidence sends stocks lower

NEW YORK — A report showing Americans are still downbeat on the economy is giving investors reason to sell stocks.

The market failed to hold on to early gains and edged slightly lower in late morning trading Tuesday after the Conference Board said its consumer confidence index fell to 53.1 in September, down from 54.5 in August, and much lower than the reading of 57 that economists had been expecting.

The private research group attributed the decline to concerns about the labor market, saying consumers are still worried about losing their jobs. Consumer confidence has been a key focus for the stock market in recent months, and many analysts say a true turnaround in the economy can’t occur until consumers start spending again and employers create more jobs.

The disappointing report was tempered by an increase in home prices, the latest encouraging sign for the troubled housing sector. The Standard & Poor’s/Case-Shiller home price index of 20 major cities showed home prices rising 1.2 percent in July from June, marking the third straight month of increases.

“The data is inconsistent, so there will be the occasional economic release that is going to trigger some selling because stocks are up a lot,” said Howard Ward, portfolio manager at GAMCO Growth Fund, referring to the market’s more than 50 percent rise off of 12-year lows in March.

In late morning trading, the Dow Jones industrials fell 39.67, or 0.4 percent, to 9,749.69. The Standard & Poor’s 500 index fell 3.33, or 0.3 percent, to 1,059.65, and the Nasdaq composite index fell 9.48, or 0.4 percent, to 2,121.26.

About four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 379.6 million shares, compared with 246.8 million shares traded at the same time on Monday.

In other trading, the Russell 2000 index of smaller companies fell 2.16, or 0.4 percent, to 611.06.

The back-and-forth trading early Tuesday followed a big jump in stocks the previous day, when the Dow Jones industrials shot up more than 120 points as news of large takeovers by Xerox Corp. and Abbott Laboratories brought hope that corporate dealmaking could be making a comeback. That would be a big positive not only for the economy but also for the stock market as investors try to figure out which companies could become acquisition targets.

Nonetheless, continued mixed signals on the economy has many investors believing that any recovery will be fitful at best. Despite better signs on manufacturing and home sales, the labor market remains beaten down and, as Tuesday’s report confirmed, consumers are still feeling anxious. Investors will get the latest news on employment on Friday when the Labor Department releases its monthly jobs report, one of the most closely watched economic reports on the calendar.

Oil prices continued their decline on the growing belief that the economy won’t be strong enough to lift demand as much as expected. Oil had been steadily rising in recent months on expectations that the economy was going to be stronger, therefore pushing demand higher.

Oil prices fell 3 cents to $66.81 on the New York Mercantile Exchange.

Meanwhile, bond prices fell after five days of gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.29 percent from 3.28 percent late Monday.

The dollar was mixed against other major currencies, while gold prices fell.

Overseas, Japan’s Nikkei stock average rose 0.9 percent. Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index lost 0.5 percent, and France’s CAC-40 slipped 0.3 percent.