Stocks ended mixed but little changed Tuesday as a key barometer of consumer confidence and a handful of disappointing corporate profit reports reminded investors that a recovery in the economy this year remains far from assured.
NEW YORK (AP) — An economic reality check is cooling the stock market’s rally.
Stocks ended mixed but little changed Tuesday as a key barometer of consumer confidence and a handful of disappointing corporate profit reports reminded investors that a recovery in the economy this year remains far from assured. The Dow slipped 12 points but the Nasdaq composite index posted a modest gain.
Major indexes held to a tight range for the third straight day. Investors remain cautious but still aren’t willing to give up on a rally that has propelled stocks up 11 percent in little more than two weeks.
Corporate earnings reports, which beat relatively meager expectations earlier this month, disappointed on Tuesday and brought reminders that many people remain unwilling or unable to spend. Office Depot Inc. and handbag maker Coach Inc. had trouble drawing in customers during the second quarter.
The unease grew after the Conference Board’s consumer confidence index fell more than expected, fanning worries that bleak expectations and a rising unemployment rate would hamper the economy’s ability to rebound from the longest recession since World War II.
If consumers don’t step up spending, companies will find it hard to boost revenue. The recent string of stronger corporate profits have come from deep cost-cutting, which can only be used to lift earnings for so long. Companies need to start showing they’re bringing in more sales and revenue.
The third upbeat reading on the housing market since last week and dealmaking in the technology industry helped temper the market’s disappointment.
Even without the latest worries about consumers, analysts have been anticipating some pause in buying after this month’s surge, which restarted a massive spring rally that began in March. That advance fizzled in mid-June on lackluster economic reports.
John Merrill, chief investment officer of Tanglewood Wealth Management in Houston, said some institutional investors are being forced to pour money into stocks to try to keep pace with a rally of 44.8 percent in the S&P 500 index since March 9. Others who might already be invested don’t want to miss out on other gains.
“That kind of gives a nice give and take with nobody motivated to strongly sell and nobody strong motivated to strongly buy,” he said.
According to preliminary calculations, the Dow slipped 11.79, or 0.1 percent, to 9,096.72 after being down as much as 101 points. The broader Standard & Poor’s 500 index fell 2.56, or 0.3 percent, to 979.62. The Nasdaq composite index rose 7.62, or 0.4 percent, to 1,975.51 after several technology companies announced acquisitions.