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A report from the Conference Board said its consumer confidence index fell to 49.3 in June from a revised 54.8 in May. The decrease surprised economists, who had expected the index to edge up to 55.3 from the 54.9 originally reported for the previous month.
The decrease reflected less favorable assessments of both current conditions and the near-term outlook.
Separately, the Institute for Supply Management - Chicago said its index of activity in the manufacturing sector jumped to 39.9 in June from 34.9 in May, although a reading below 50 indicates a continued contraction. Economists had been expecting the index to increase to a reading of 39.0.
Earlier, the S&P Case-Shiller Home Price Index, a closely watched measure of home prices, showed a 0.6 percent decline from March to April, according to a survey of prices in 20 U.S. cities. Home prices were down 18.1 percent compared to the same period last year.
On the corporate front, chipmaker Broadcom (BRCM | Quote | Chart | News | PowerRating) announced that it raised its tender offer to acquire all of the outstanding shares of common stock of Emulex (ELX | Quote | Chart | News | PowerRating) to $11.00 per share in cash, representing a total equity value of about $912 million. Emulex said its Board of Directors would review the terms of the revised offer.
In earnings news, private education firm Apollo Group (APOL | Quote | Chart | News | PowerRating) reported third quarter net income of $1.26 per share, compared to $0.85 per share in the prior year quarter. The earnings beat Wall Street analyst forecasts of $1.12 per share. The stock climbed by 7.8 percent on the day.
Further, tax preparer H&R Block (HRB | Quote | Chart | News | PowerRating) reported fourth quarter net income of $2.09 per share, compared to $1.66 per share in the year-ago quarter. The results edged out analyst expectations of $2.05 per share.
H&R Block also said it expects fiscal 2010 earnings in the range of $1.60 to $1.80 per share. Analysts currently expect the company to earn $1.66 per share for the year. The stock rose by 10 percent on the day as traders reacted to the news.
The major averages moved off their worst levels late in the session but still posted notable losses. The Dow closed down by 82.38 points or 1 percent at 8,447.00, the Nasdaq dipped by 9.02 points or 0.5 percent to 1,835.04, and the S&P 500 fell 7.91 points or 0.9 percent to 919.32.
Sector News
Resource stocks saw a considerable pullback, with gold, steel, and oil service stocks all posting notable losses. The NYSE Arca Gold Bugs Index closed down by 3.7 percent while the NYSE Arca Steel Index and the Philadelphia Oil Service Index slid by 1.8 percent and 1.5 percent, respectively.
The slide by gold and oil stocks came as their related commodities prices fell on the NYMEX. Gold for August delivery fell $13.30 to $927.40 an ounce, while crude for August delivery closed down $1.60 at $69.89 a barrel.
The day's pullback by steel stocks was accelerated by shares of Schnitzer Steel (SCHN | Quote | Chart | News | PowerRating), which dropped by 12.2 percent after reporting a third quarter loss versus a year-ago profit. With the decline, the stock finished at its worst closing price in just over one month.
Further weakness was visible among healthcare provider stocks, as reflected by the 2.4 percent loss posted by the Morgan Stanley Healthcare Provider Index. The day's decline snapped four straight days of gains, although the index was able to remain in a two-month trading range.
Other stocks that retreated by notable margins on the day included telecommunications, tobacco and airline stocks. On the other hand, some strength was visible among real estate and computer hardware stocks.
Dow Components
A vast majority of the Dow components ended the day in negative territory, contributing to the loss posted by the blue chip index.
Caterpillar (CAT | Quote | Chart | News | PowerRating) helped to drag the Dow lower, with the construction equipment maker closing down 4.9 percent. Despite the notable pullback, the stock remained stuck in a two month trading range.
Communications giant Verizon (VZ | Quote | Chart | News | PowerRating) also showed a notable decline on the day, dropping by 2 percent. The day's decline dragged the stock well off its best closing price in well over two months, reached in the previous session.
While shares of American Express (AXP | Quote | Chart | News | PowerRating), Procter & Gamble (PG | Quote | Chart | News | PowerRating), Cisco (CSCO | Quote | Chart | News | PowerRating) and Pfizer (PFE | Quote | Chart | News | PowerRating) also slipped, strength emerged in shares of Intel (INTC | Quote | Chart | News | PowerRating). The stock advanced by 1 percent on the day, climbing to a nearly two-month closing high.
Joining Intel in the green were shares of McDonald's (MCD | Quote | Chart | News | PowerRating), Merck (MRK | Quote | Chart | News | PowerRating) and 3M (MMM | Quote | Chart | News | PowerRating), all of which posted modest gains.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region ended Tuesday's session on a mixed note. Japan's benchmark Nikkei 225 Index closed up by 1.8 percent, while Hong Kong's Hang Seng Index slid 0.8 percent.
Meanwhile, the major European markets closed firmly on the downside, with the German DAX Index and French CAC 40 Index finishing down by 1.6 percent and 1.7 percent, respectively. The U.K.'s FTSE 100 Index also fell, showing a decrease of 1 percent.
In the bond markets, treasuries finished modestly lower following a volatile session. Subsequently the yield on the benchmark ten-year note closed at 3.521 percent, representing a gain of 2.9 basis points on the day.
Looking Ahead
Amid another influx of economic data on Wednesday, traders are likely to focus on private payroll processor ADP's employment report, as it may serve as a precursor to the government's landmark employment situation report due out Thursday.
Economists expect the ADP report to show a decrease of 394,000 private sector jobs in June compared to a decline of 532,000 jobs in May. The report is set to be released at 8:15 a.m. ET.
Further, traders will look to the ISM's manufacturing index for a nationwide gauge of industrial activity for June. Economists expect a reading of 44.6 for the month, compared to 42.8 in May. The data is scheduled for a 10:00 a.m. ET release.
Pending home sales, construction spending and auto sales figures may also attract some attention from investors.
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