Wall Street closed lower Tuesday amid profit-taking from the previous session’s big gains, though the market held on reasonably well despite a surprising drop in consumer confidence and a disappointing forecast from Texas Instruments Inc.
The major indexes were down for much of the day, and then recovered most of their losses in late trading. Still, the market’s given and take reflected the unknowns facing investors.
Wall Street remained gratified by the nomination of Bush administration economist Ben Bernanke to succeed Alan Greenspan as head of the Federal Reserve Board, but also continued to worry about inflation in the face of slow economic growth and warnings of declining fourth-quarter sales or profits from major companies like Texas Instruments.
Stocks were further pressured as the Conference Board reported that its consumer confidence index fell to 85 in October, down from 86.6 in September and less than the 88 reading economists had expected. The unexpected drop raised new concerns about consumer spending just a month before the start of the holiday shopping season.
“We’re in a market that is clearly in a little short-term decision box,” said Rod Smyth, chief investment strategist at Wachovia Securities. “It’s the debate whether core inflation remains low, which allows the Fed to stop raising rates, or whether core inflation is not able to be contained. We’ll get a progression of data and numbers that will help resolve this somewhat, but until then, we’re in the box.”
Oil prices rebounded sharply after losing ground in the previous trading session, adding to investors’ worries.
The Dow Jones industrial average finished the session down 7.13 points, or 0.1 percent, off its earlier low, while the broader Standard & Poor’s 500-stock index was down 2.84 points, or 0.2 percent. The tech-rich Nasdaq composite index fell 6.38 points, or 0.3 percent.
In other economic news, existing home sales for September, reported by the National Association of Realtors, were steady at an annualized rate of 7.28 million homes, slightly higher than expected. However, the increase was due to higher demand for new homes among refugees from Hurricane Katrina; without that demand, sales would have fallen.
While third-quarter earnings from Texas Instruments rose 12 percent from the year-ago quarter, the company’s revenue forecasts for the fourth quarter were weaker than expected. That led Bear Stearns analysts to downgrade the company’s stock. Texas Instruments dropped $2.37, or 7.7 percent, to $28.55.
“Obviously, with the Nasdaq leading losses, Texas Instruments’ problems are bleeding through to the rest of the tape,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “It was just enough negativity to push us over the edge and fuel some of this profit-taking we’re seeing here.”
DuPont Co. gained $1.18 to $40.80 after one-time charges related to hurricane damage and taxes. Without those charges, the company’s earnings beat Wall Street forecasts by 3 cents per share. The chemical maker also announced a $5 billion stock buyback program.
Earnings at International Paper Co. rose sharply in the third quarter on proceeds from the sale of an Australian forest products company and a tax settlement. Despite materials and energy costs, the company surpassed analysts’ earnings expectations by 9 cents per share. International Paper nonetheless lost 37 cents to $28.
Cablevision Systems Corp. tumbled $3.54, or 13 percent, to $24.26 after the Dolan family, the company’s majority shareholders, withdrew a plan to take the cable operator private. The family has recommended that Cablevision’s board issue a $3 billion special dividend to shareholders instead.
Overseas, Japan’s Nikkei stock average surged 1.33 percent. In Europe, Britain’s FTSE 100 closed down 0.49 percent, France’s CAC-40 lost 0.56 percent and Germany’s DAX index dropped 0.59 percent.