Dow now at 9,874, up 6 points.
NEW YORK (AP) — Stocks are zigzagging as investors weigh mixed
reports on home prices and consumer confidence.
A decision Tuesday by IBM Corp. to double its stock-repurchase plan
gave a boost to the Dow Jones industrials but the Nasdaq composite
index fell. Falling stocks outpaced those that rose.
Stocks began the day higher following a report that home prices in
20 major metropolitan markets rose for the third straight month in
August. The Standard & Poor’s/Case-Shiller home price index gained
1 percent in August from July.
Home prices fell 11.4 percent from a year earlier, which was a
smaller drop than economists polled by Thomson Reuters predicted.
The year-over-year slide has slowed since February, indicating the
housing market is stabilizing.
Investor sentiment took a hit after a report from a private
research group caused worries that consumers might not be ready to
spend this holiday season. Consumer strength is considered vital to
a recovery in the economy.
The Conference Board’s Consumer Confidence Index fell unexpectedly
to 47.7 in October — its second-lowest reading since May. Analysts
predicted a reading of 53.1.
Even if the index had met expectations, consumer confidence is
still weak and remains one of the most worrisome problems facing
the economy. A reading above 90 signals solid footing for the
economy, and a measure above 100 signals strong growth.
The market’s swings come as stocks have fallen in four of the past
five days.
The Dow led major stock benchmarks after IBM, one of the 30
companies that make up the index, said it added $5 billion to its
stock repurchase fund. The total now stands at $9.2 billion.
Economic data remain a focus for investors, especially consumer
spending. Many of the companies that have reported third-quarter
earnings are posting profits that are ahead of forecasts but many
consumers are worried about their jobs and are holding back
spending.
“When I look at the consumer, I think that is the next big test,”
said Dave Hinnenkamp, chief executive KDV Wealth Management in
Minneapolis. “We’ve passed a big test on the earnings front.”
In early afternoon trading, the Dow Jones industrial average rose
39.38, or 0.4 percent, to 9,907.34. The broader Standard & Poor’s
500 index rose 0.70, or 0.1 percent, to 1,067.65, while Nasdaq fell
13.21, or 0.6 percent, to 2,128.64.
Bond prices rose ahead of the government’s latest auction, pushing
yields lower. The Treasury is auctioning off $44 billion in
two-year notes Tuesday afternoon. The yield on the benchmark
10-year Treasury note fell to 3.50 percent from 3.56 percent late
Monday.
Traders are getting a fresh dose of earnings reports. United States
Steel Corp. fell $2.74, or 6.8 percent, to $37.84 after reporting
that it lost money for a third straight quarter as demand waned
because of the struggling global economy.
Credit card processor Visa Inc. reports after the market closes.
Its results should provide insight into whether consumers are back
in stores and spending money. Visa rose $1.43, or 2 percent, to
$74.21.
Stocks have struggled in recent days as the dollar has been
strengthening, which tends to push the prices of commodities lower.
Commodities are traded in dollars, so a stronger dollar makes it
more expensive for foreign investors to buy into the market.
The Dow fell 104 points Monday after a drop of about the same size
Friday. It was the first consecutive triple-digit loss for the Dow
since mid-June.
Fears of an overheated market have also been contributing to the
slide in the week since major indexes hit their highest levels in
more than a year. The market has been surging with little pause
since March, and analysts have been saying for months that stocks
are due for a consolidation.
Investors are also looking to the government’s first reading on
economic output for the July-September quarter. The report on gross
domestic product due Thursday is expected to signal an end to the
recession that began in December 2007. Economists predict the
economy grew at an annual rate of 3.2 percent in the quarter,
according to Thomson Reuters.
The dollar was mixed against other major currencies.
Crude oil rose 77 cents to $79.45 per barrel on the New York
Mercantile Exchange.
IBM, the biggest driver of the Dow, rose $1.24, or 1 percent, to
$121.35.
Four stocks fell for every three that rose on the New York Stock
Exchange, where volume came to 628.5 million shares compared with
686 million shares traded at the same point Monday.
The Russell 2000 index of smaller companies slid 0.18, or less than
0.1 percent, to 593.50.
In afternoon trading, Britain’s FTSE 100 rose 0.2 percent,
Germany’s DAX index fell 0.1 percent, and France’s CAC-40 slipped
less than 0.1 percent. Japan’s Nikkei stock average fell 1.5
percent.
