updated 11/1/2006 9:01:08 AM ET 2006-11-01T14:01:08

Stocks wobbled and closed mixed for a second straight session Tuesday after a dip in consumer confidence countered better-than-expected quarterly results from companies such as Eastman Kodak Co. Nonetheless, Wall Street ended an unusually strong October with solid gains for the month.

Major Market Indices

The market was uneasy after the Conference Board said its index of consumer confidence fell to 105.4 from 105.9 in September. The reading was well below the 107.8 analysts expected and raised concerns on Wall Street about the strength of consumer spending, and in turn, the economy, in the coming months.

Tuesday’s trading recalled Monday’s session, when stocks meandered as investors digested mixed economic data and a weak sales report from Wal-Mart Stores Inc. that also made them question consumer sentiment.

“The consumer is spooking the equity markets and driving the bond market to rally,” said Andrew Richman, fixed-income strategist at SunTrust Bank’s personal asset management arm. However, Richman sees the markets as being able to shrug off some of the news as hopes grow that the Federal Reserve will cut short-term interest rates next year if inflation continues to dissipate and the economy slows.

According to preliminary calculations, the Dow Jones industrial average fell 5.77, or 0.05 percent, to 12,080.73. The Dow had fallen by more than 52 points earlier in the session.

Broader stock indicators were barely higher. The Standard & Poor’s 500 index rose 0.01, or less than 0.01 percent, to 1,377.94, and the Nasdaq composite index rose 2.94, or 0.12 percent, to 2,366.71.

The tepid session wrapped up an unusually strong October.

Some of the market’s worst days, including the 1929 and 1987 crashes, occurred in October. An October rally is about as rare on Wall Street as an October snowstorm is in Washington, D.C. But this October was one for the record books as the Dow gained 401.66 for the month, or 3.44 percent boost.

The Dow dominated the headlines, hitting record after record, but broader indexes also saw impressive gains, with the Nasdaq climbing 108.28, or 4.79 percent, for the month and the Standard & Poor’s 500 gaining 42.09 or 3.15 percent.

Investors will consider other economic news as they try to determine whether the run-up will continue. The Labor Department said its Employment Cost Index rose 1 percent in the third quarter, the largest quarterly increase since the second quarter of 2004. Also, the purchasing managers index for the Chicago area declined to a 53.5 reading in October from 62.1 last month and was well below the 58.0 Wall Street had been expecting.

But with the Dow up more than 12 percent for the year and the S&P 500 up more than 10 percent, investors are taking money off the table, said Brian Gendreau, investment strategist for ING Investment Management. By some measures, short-interest is now at an all-time high, as investors bet on stocks to fall.

In trading Tuesday, bonds were up sharply. The yield on the benchmark 10-year Treasury note was 4.61 percent, down from 4.67 percent late Monday. The dollar fell against other major currencies; gold prices also fell.

Crude oil rose 37 cents to settle at $58.73 a barrel on the New York Mercantile Exchange. It had traded sharply lower earlier in the session as political unrest in Nigeria faded, allowing production to resume. Also, doubts remain about whether OPEC will implement production cuts.

The quarter’s streak of strong earnings reports continued, but that did not cheer the market enough to lift stocks.

Kodak rose 65 cents, or 2.75 percent, to $24.40 after posting a narrower-than-expected loss amid a 10 percent decline in sales. The company has tried to reap profits from digital photography as its bread and butter film business has eroded.

UAL Corp., parent of United Airlines, fell 83 cents, or 2.26 percent, to $35.94 after reporting a profit for the second straight quarter ; the company hadn’t achieved that success in more than six years.

Procter & Gamble Co., whose stable of brands includes Pringles and Head & Shoulders, posted a 33 percent increase in its fiscal first-quarter profit as revenue rose 27 percent. The shares fell 42 cents to $63.39 after investors frowned on the company’s forecast.

International Business Machines Corp. gave a boost to the Dow after announcing it approved spending $4 billion to buy back stock. IBM rose 83 cents to $92.33.

Sirna Therapeutics Inc. nearly doubled, surging $6.18, or 95.81 percent, to $12.63 after pharmaceutical company Merck & Co. agreed to acquire the biotechnology company for $1.1 billion, or $13 per share. Merck fell 22 cents to $45.42.

Martha Stewart Living Omnimedia Inc. jumped $1.02, or 5.05 percent, to $21.20 after posting a narrower third-quarter loss as advertising revenue grew.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 1.75 billion shares.

The Russell 2000 index of smaller companies fell 3.52, or 0.46 percent, at 766.84.

Overseas, Japan’s Nikkei stock average closed up 0.29 percent. In afternoon trading, Britain’s FTSE 100 rose 0.04 percent, Germany’s DAX index rose 0.17 percent, and France’s CAC-40 fell 0.25 percent.

Assocaited Press and Reuters contributed to this report.

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