A surprise drop in consumer confidence tripped up investors Tuesday, a day after a round of corporate takeovers set off a steep market rally.
Stocks slid after the Conference Board said its consumer confidence index fell unexpectedly in September, depressed by persistent worries about the job market.
The report offset early enthusiasm over an increase in home prices.
Stocks broke a three-day losing streak Monday after news of several big takeovers signaled that corporate America was feeling more confident about the economy and willing to take on more risk via mergers and acquisitions.
“You had these M&A; deals make people feel better about growth prospects and valuations,” said Nick Kalivas, an analyst at MF Global. But without any fresh takeover news Tuesday, he said, “the market really lacks a forward catalyst.”
With economic reports still mixed, some investors doubt the staying power of the market’s nearly seven-month advance. The benchmark Standard & Poor’s 500 index is up 58% since hitting a 12-year low in March.
The Dow Jones industrials fell 47.16 points, or 0.5%, on Tuesday to 9,742.20, after gaining 124 points Monday. The S&P; 500 index slipped 2.37 points, or 0.2%, to 1,060.61, and the Nasdaq composite index fell 6.70 points, or 0.3%, to 2,124.04.
The Russell 2,000 index of smaller companies slumped 0.5%.
Falling stocks narrowly outpaced those that rose on the New York Stock Exchange.
Energy stocks slid as oil lost ground on worries that the economy won’t be strong enough to lift demand as much as expected. Crude futures fell 13 cents to settle at $66.71 on the New York Mercantile Exchange.
In other market highlights:
* Shares of Walgreen shot up 9.2% after the drugstore operator said prescription drug sales rose in the fourth quarter, pushing the company’s results past expectations.
* Gannett soared 18%. The largest U.S. newspaper publisher said third-quarter earnings would far exceed expectations despite a shortfall in revenue.
* Polo Ralph Lauren gained 4.2% on an analyst upgrade of the apparel maker’s stock.
* Warner Music Group surged 8.9%. YouTube, a unit of Google, said Warner’s music videos would return to its website after a nine-month dispute over deal terms.
* Treasury bonds finished little changed. The benchmark 10-year T-note finished at 3.29%, unchanged from late Monday.
* The dollar was mixed against other major currencies, while gold edged higher.
* Overseas, key stock indexes fell 0.1% in Britain, 0.4% in Germany and 0.3% in France. Shares in Japan rose 0.9%.