NEW YORK (Reuters) –
Stocks fell on Tuesday as a surprise drop in a gauge of consumer confidence overshadowed signs of stabilization in housing and solid earnings from Walgreen Co (WAG.N).
With the third quarter drawing to a close, trading was volatile and volume light.
Stocks started higher but then turned lower as the Conference Board's Consumer Confidence Index for September fell, underscoring concerns about personal finances amid the worst job market in 26 years.
Even so, investors were reluctant to sell, and trading shifted between small losses and break-even for most of the session following Monday's rally when the S&P 500 index rebounded to snap a three-day losing streak.
"You had a bit of mixed economic data and the market is a little bit mixed too," said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut. "There were big gains yesterday, so it's not surprising to see a little bit of a pullback."
The Dow Jones industrial average (.DJI) dropped 47.16 points, or 0.48 percent, to 9,742.20. The Standard & Poor's 500 Index (.SPX) shed 2.37 points, or 0.22 percent, to 1,060.61. The Nasdaq Composite Index (.IXIC) dipped 6.70 points, or 0.31 percent, to 2,124.04.
After the bell, Nike Inc (NKE.N) posted a quarterly profit that beat Wall Street's forecasts, sending its stock up 4 percent. Nike shares had ended the regular session up 1.9 percent at $60.09.
Major drags included some of the stellar performers in Monday's run-up, including manufacturer 3M Co (MMM.N), off 1.4 percent to $73.94 and network equipment maker Cisco Systems Inc (CSCO.O), down 1.3 percent at $23.30. Apple Inc (AAPL.O) declined 0.4 percent to $185.38.
The semiconductor index (.SOXX) shed 1.4 percent after rising 2.1 percent on Monday.
Retreating oil prices weighed on energy shares, with Chevron (CVX.N) off 1.1 percent at $70.91. U.S. front-month crude settled down 13 cents at $66.71 a barrel.
But shares of Walgreen jumped 9.2 percent to $37.35 after the largest U.S. drugstore chain reported a quarterly profit that topped expectations. The S&P food & drug retail industry index (.GSPFDGR) rose 1.6 percent.
An improved S&P/Case-Shiller home price index reading that hinted at stabilization in the housing market lifted the Dow Jones home construction index (.DJUSHB) up 0.5 percent during the regular session.
Shares of Moody's Corp (MCO.N) and The McGraw-Hill Companies Inc (MHP.N) jumped after Piper Jaffray analysts said the rating agencies were in a favorable position as debt issuance improved substantially in September year-over-year.
Moody's jumped 10.9 percent to $20.81 on the NYSE and McGraw-Hill, parent of Standard and Poor's, rose 7.3 percent to $26.11.
Window dressing -- when fund managers sell laggards in favor of outperformers to spruce up portfolios -- tends to make quarter-end trading volatile.
The S&P 500, up 15.4 percent so far this quarter, is making a run for its best quarterly performance since the fourth quarter of 1998. The benchmark index has rallied nearly 60 percent from the 12-year low of early March.
A year ago on Tuesday the Dow suffered its biggest slide ever when it plunged 778 points after U.S. lawmakers first rejected a $700 billion financial bailout.
Volume was light, with about 1.18 billion shares changing hands on the New York Stock Exchange, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.10 billion shares traded, below last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones by a ratio of about 8 to 7 on the NYSE, while on Nasdaq, about seven stocks fell for every five that rose.
(Editing by Kenneth Barry)
MADOFF AFTERMATH: To prevent another breakdown like the Bernard Madoff fraud, the Securities and Exchange Commission's inspector general is recommending a new system for handling the thousands of tips and complaints the agency receives, among other changes.
CHANGES AT THE SEC: Inspector General David Kotz says it should be easier for junior-level enforcement attorneys to bring their concerns to top managers, and that people with backgrounds in Ponzi schemes should be put on investigating teams.
WHY IT'S NEEDED: The SEC bungled its five investigations of Madoff despite numerous red flags raised over 16 years by outsiders. Kotz says the enforcement staff investigating Madoff was inexperienced and lacked adequate guidance on how to analyze complaints.
WASHINGTON (Reuters) –
The U.S. Federal Reserve on Tuesday proposed tough new credit card rules to protect consumers from potentially costly practices by lenders and moved to implement legislation enacted in May.
"This proposal is another step forward in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly," said Fed Board Governor Elizabeth Duke said in a statement.
The proposals, issued for public comment, represent part of the Fed's implementation of the Credit Card Act, which was signed into law by President Barack Obama in May.
The Fed adopted final rules prohibiting unfair credit card practices in December 2008. The proposals released on Tuesday amend those regulations to incorporate provisions in the new credit card law.
"The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts," Duke said.
They would protect consumers from unexpected increases in credit card interest rates by generally prohibiting a rate rise in the first year after an account is opened, and increases in a rate that applies to an existing car balance.
They would also prohibit creditors issuing a card to anyone under the age of 21 unless the borrower has either the ability to make the required payment, or has the signature of a parent or other co-signer who has the means to do so.
In addition, the proposed rules would mean a consumer's consent would be needed before creditors could charge fees for transactions that exceed the credit limit, and curb fees linked to subprime cards for consumers with risky credit.
They would also ban "two-cycle" billing methods, where a creditor raises an interest rate and charges the higher rate for a customers' previous borrowing.