Stocks came back in the last hour of trading to finish mixed Tuesday on a disappointing report on the mood of the U.S. consumer. The late-day buying spree that reversed prices was fueled by short-covering and bargain hunting, according to S&P MarketScope.
The Dow Jones Industrial average inched up 0.90 of a point, or 0.01%, to 8,368.94. The tech-heavy Nasdaq composite index lost 15.30 points, or 1.16%, to 1,300.53. And the broader Standard & Poor's 500-stock index was down 8.08 points, or 0.91%, to 882.15.
There are no major economic reports scheduled for Wednesday. The next report to watch will be Thursday's advance third-quarter gross domestic product figure. Other important data coming out Friday include the employment and manufacturing reports.
The earnings roster, however, will be heavy on Wednesday. Companies expected to report quarterly results include Electronic Data Systems (EDS ), CVS (CVS ), Qwest Communications (Q ), Chubb (CB), and TXU (TXU ).
On Tuesday, the Conference Board reported that the consumer confidence index fell to 79.4 in October from a revised 93.7 in September. That's a nine-year low for the index and much less than a mild drop to 90 that was widely expected.
Ongoing weak levels in the stock market, concerns about a war with Iraq, and lingering uncertainty regarding the economy and employment all are continuing to depress consumers' outlook, says economic research outfit MMS International. The report raised concerns that consumer spending may be weak during the key holiday shopping season and that the economy could slip back into recession. The data also puts pressure on the Federal Reserve to ease interest rates soon, says Standard & Poor's.
At the same time, investors had some quarterly earnings news to take in. Dow component Procter & Gamble (PG ) reported better-than-expected first-quarter operating EPS of $1.12, vs. 96 cents a year ago, on 11% higher sales. The consumer products maker sees mid- to high single-digit EPS growth and sales in the mid- to upper single-digits for the second-quarter, and kept its fiscal year 2003 guidance. The stock gained ground on the report, and helped push other consumer products issues up.
Wireless communications stocks were among the big losers after Moody's cut its credit ratings on a number of names, including AirGate PCS (PCSA ) and US Unwired (UNWR ). Financial services stocks were also down after Salomon Smith Barney downgraded T Rowe Price (TROW ), Neuberger Berman (NEU ), Waddell & Reed (WDR ), and Franklin Resources (BEN ) to in-line from outperform based on valuation.
In other corporate news, the Wall Street Journal reported that AOL Time Warner (AOL ) chairman Steve Case has been telling senior executives that he would take back the American Online unit through some sort of spinoff amid complaints that the business has been a drag on the media giant.
General Electric (GE ) disclosed in a quarterly 10-Q filing with the Securities and Exchange Commission that about $800 million in investment securities are at risk of being charged against earnings over the next 12 months, according to wire-service reports. GE also said its exposure to troubled airlines US Airways and United Airlines, which are GE customers, is $4.4 billion.
Treasuries surged Tuesday following a very large decline in October consumer confidence.
European markets were down after energy giant BP (BP ) reported a 13% decline in third-quarter profits and trimmed its 2002 oil and gas production growth forecast for the third time this year. In London, the Financial Times-Stock Exchange 100 index fell 154.6 points, or 3.78%, to 3,935.9.
In France, the CAC 40 lost 155.74 points, or 5%, to 2,965.11. And in Germany, the DAX Index declined 176.95 points, or 5.5%, to 3,022.01.
In Asia, the markets ended lower. In Japan, the Nikkei declined 48.75 points, or 0.56%, to 8,708.76, hurt by a poor earnings outlook from Honda Motor. In Hong Kong, the Hang Seng skidded 219.07 points, or 2.22%, to 9,634.67.