Dow falls 100 points after consumer confidence miss
U.S. stocks traded lower Tuesday, stabilizing after recent gains, as investors eyed oil prices and economic data.
Stocks extended losses after The Conference Board said its consumer confidence index fell to 92.2 in February, down from a downwardly revised 97.8 in January. Analysts polled by Reuters had expected the index to hold near January levels.
“I think obviously the price of oil is giving back part of its gains but I think the fall in consumer confidence is dampening investors’ enthusiasm,” said Peter Cardillo, chief market economist at First Standard Financial.
The Dow Jones industrial average traded more than 100 points lower, as declines in Goldman Sachs and JPMorgan Chase weighed. JPMorgan holds its investor day Tuesday. Home Depot pared earlier gains but remained the top contributor to gains following encouraging earnings.
“We had a pretty good amount of economic data last week, the majority of which was pretty positive, which I think helped push the market higher, but primarily it’s oil doing it,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
“Even the perception of some sort of a cut in production when you’re at record high levels gives you some hope that prices will move higher,” he said, noting oil prices will need to approach $40 a barrel “for everyone to be happy.”
U.S. crude oil futures for April delivery traded lower near $32.30 a barrel as of 10:24 a.m. ET, below Monday’s closing price of $33.39 a barrel but above the final price on the March contract of $31.48 a barrel. The March contract rolled to April after the settle Monday.
Saudi Oil Minister Ali al-Naimi said at the CERAWeek energy conference there is more to unite energy industry participants than to divide them.
On the data front, the S&P/Case-Shiller 20 city composite home price index showed a 5.7 percent increase year-over-year in December.
U.S. home resales unexpectedly rose in January, reaching a six-month high, in the latest sign that the economy remains on firmer ground despite slowing global growth and tightening financial market conditions, Reuters said.
The National Association of Realtors said on Tuesday existing home sales increased 0.4 percent to an annual rate of 5.47 million units, the highest level since July. Last month’s sales pace was also the second highest since 2007.
“After a strong open yesterday, stocks digested their gains in a consolidation phase that is giving way to a pullback in the S&P futures this morning,” BTIG Chief Technical Strategist Katie Stockton said in a note.
“Our indicators suggest that the relief rally still has a hold on the market, but we expect overbought “sell” signals to unfold by Friday,” she said. “With this in mind, we would consider taking down exposure into additional strength, which we think could take the SPX closer to a Fibonacci retracement level near 1980 before the rally falters.”
U.S. stocks closed more than 1 percent higher Monday, building on their best weekly gain of 2016, as oil prices climbed.
Home Depot, the No. 1 U.S. home improvement chain, reported better-than-expected quarterly sales, boosted by an improving housing market and unseasonably warm weather in the holiday quarter.
In morning trade, the Dow Jones industrial average traded down 60 points, or 0.37 percent, to 16,560, with JPMorgan Chase leading decliners and Home Depot leading three advancers.
The S&P 500 traded down 9 points, or 0.47 percent, to 1,936, with energy leading all 10 sectors lower.
The Nasdaq composite declined 24 points, or 0.53 percent, to 4,546.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 19.5.
About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 53 million and a composite volume of 139 million.
Crude oil futures for April delivery fell 83 cents to $32.56 a barrel on the New York Mercantile Exchange.
Gold futures for April delivery gained $11.70 to $1,221.80 an ounce as of 9:35 a.m. ET.