Stocks let go of earlier gains and finished mixed to slightly lower on Tuesday. Investors seemed encouraged by strong showings on durable goods orders, consumer confidence, and new home sales, but a spike in Treasury yields halted potential gains. The stock market appears to be in correction mode following highs reached in major indices last week, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 2.56 points to 10,888.16. The broader Standard & Poor's 500 index was essentially flat at 1,257.48. The tech-heavy Nasdaq composite index fell 6.66 points to 2,232.71.
NYMEX crude oil prices continued to slip, down 86 cents to $56.50, amid warm U.S. weather and supply hopes, reports Action Economics. However, forecasts for colder U.S. weather over the next 6 to 10 days kept natural gas prices bid through the session, says Action Economics.
Meanwhile, gold prices closed a bit higher after eclipsing $500 per ounce overnight for the first time since 1983.
There are a few more economic reports coming Wednesday. The revision to third-quarter gross domestic product (GDP) growth is expected to be revised up to 4.0% from the advanced reading of 3.8%, according to Action Economics. "The market is already looking ahead to the fourth quarter, where we expect growth in the 3.5%-4.0% range," says Action Economics.
The November Chicago-PMI is expected to moderate to a still-solid 60.4 from the stronger-than-expected reading of 62.9 in October, according to Action Economics.
Economic news Tuesday provided a positive backdrop for stocks. U.S. durable orders rebounded 3.4% in October after slumping 2.0% in September (revised from -2.1% previously). Transportation orders surged 11.4% with the end of the Boeing (BA) strike (civilian aircraft rose 50.4% after dropping 41.5% in September). Excluding transportation, orders were up only 0.3%.
Meanwhile, new home sales surged 13% in October to a record 1,424,000 units annual rate from 1,260,000 in September, the largest increase in 12 years, despite higher mortgage rates. The housing market is not cooling off as much as anticipated, notes S&P MarketScope.
A report on the mood of the consumer was also bullish for stocks. The Conference Board's Consumer Confidence index surged to 98.9 in November from 85.2 in October, which was revised upward from 85.0. The recovery was the largest increase in two years. The expectations component jumped to 88.8 from 70.1.
In company news, Weyerhauser (WY) said it was seeking to sell its composite panels business.
French food company Danone (DA) was trading higher in Europe on speculation that Kraft Foods (KFT) is preparing a bid.
UBS downgraded telecom stocks BellSouth (BLS) and Qwest Communications (Q) to neutral from buy.
In Europe, London's FTSE-100, Germany's DAX, and France's CAC-40 indexes rose modestly. In Asia, Japan's Nikkei index fell 59.24 points to 14,927.7. The Hang Seng index lost 71.24 points to 15,028.76.
Treasury prices fell sharply Tuesday on the day's positive economic data. The benchmark 10-year note yield snapped back up to the 4.48% area.