Major stock indexes were down in moderate trading Tuesday, as a larger-than-expected drop in a closely watched indicator of April manufacturing activity was outweighing a rise in May consumer confidence. The market weakness may partly reflect month-end profit-taking after gains in May, according to Standard & Poor's MarketScope. Commodity stocks were falling on dollar strength following France's rejection of the European Union constitution.
On Tuesday, the Dow Jones industrial average fell 52.50 points, or 0.50%, to 10,490.05. The broader Standard & Poor's 500 index was down 5.39 points, or 0.45%, to 1,193.39. The tech-heavy Nasdaq composite index lost 7.40 points, or 0.36%, to 2,068.33.
In the energy markets Tuesday, West Texas Intermediate crude oil was down 18 cents at $51.67 a barrel, recovering from earlier lows.
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 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 trading higher, on the fallout from the French rejection of the European Union constitution, the gains in European bonds after weaker economic data, and the stronger dollar, according to Action Economics. The yield on the 10-year benchmark was 4.025.
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. Reaction to news that President Chirac appointed Interior Minister Dominique de Villepin as new Prime Minister, replacing Jean-Pierre Raffarin, was muted.
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.