The stock market put its big rally on hold Tuesday after disappointing earnings and economic reports reminded investors of the obstacles still facing the economy.
The Dow Jones industrial average fell 38 points after rising 208 Monday on brighter economic news. All the major indexes fell moderately.
Investors were unhappy with just about every major earnings or economic report Tuesday. Procter & Gamble Co. and Dow Chemical Co. reported earnings and revenue that fell short of forecasts.
Consumer spending and income figures showed that people are still very cautious with their money. Factory orders fell in June, as did the number of homes that were under contract to be sold.
The stream of bad news was a reminder that the recovery is going to be bumpy and slow. So, following the market's pattern of recent months, they gave back some of Monday's big gain, which was due in part to manufacturing news that was better than expected. Trading has been erratic since the spring amid the conflicting signals about the recovery, and many traders are quick to cash in any profits.
Traders are also uneasy ahead of the Labor Department's July employment report due out Friday. Consumers are not expected to significantly increase their spending until they feel more secure about their jobs.
Dan Cook, a Chicago-based senior market analyst with the brokerage firm IG Markets, said many traders stayed out of the market while they waited for the employment report.
"These severely choppy markets are scaring individual investors," he said. "There's no way we can get them back in the game without getting the employment numbers up."
Investors are also uneasy about two other labor market reports this week. The payroll company ADP on Wednesday will release its count of the number of jobs created or lost at private employers in July. And on Thursday, the Labor Department issues its weekly report on the number of laid-off workers who filed for unemployment benefits for the first time.
The Dow fell 38.00, or 0.4 percent, to 10,636.38. The Standard & Poor's 500 index fell 5.40, or 0.5 percent, to 1,120.46, while the Nasdaq composite index fell 11.84, or 0.5 percent, to 2,283.52.
Losing stocks were ahead of gainers by 2 to 1 on the New York Stock Exchange, where volume came to 1 billion shares. Light volume can intensify stocks' price swings.
Investors sought the safety of Treasury bonds, which pushed interest rates lower. Reports the Federal Reserve could start buying bonds again also added to their strength. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.92 percent from 2.97 percent late Monday.
Jack Stoltzfus, senior market strategist with Ticonderoga Securities, said the market is likely to vacillate for a while with investors hesitant to buy heavily amid ongoing concerns about the economy, not just in the U.S. but in other countries as well.
"It's a market that goes from worry to celebration pretty quickly," he said. "It is prone to surprises as well as prone to disappointments."
Procter & Gamble, the maker of Tide and Pampers, fell $2.12, or 3.4 percent, to $59.94. Dow Chemical dropped $2.83 or 10 percent, to $25.50.
Among the day's economic reports, the Commerce Department said personal income and spending were both unchanged in June after rising 0.3 percent and 0.1 percent respectively in May. The readings were also short of forecasts of economists polled by Thomson Reuters.
The department also said factory orders fell 1.2 percent in June, the second straight monthly drop and more than double the amount economists expected.
The National Association of Realtors said its index of pending home sales fell to its lowest level since it began keeping records in 2001. The index dropped 2.6 percent to a reading of 75.7. Economists had predicted that the index that measures the number of people who signed contracts to purchase homes would rise to 78.1.
A housing recovery is expected to be slow now that tax incentives for buyers have expired. And many would-be buyers are worried about their jobs.
Overseas, Britain's FTSE 100 fell less than 0.1 percent, Germany's DAX index rose 0.3 percent, and France's CAC-40 fell 0.1 percent. Japan's Nikkei stock average rose 1.3 percent.