After once again failing to sustain an initial downward move, stocks showed a lack of direction throughout the trading day on Tuesday. The major averages bounced back and forth across the unchanged line before eventually ending the session modestly lower.

The choppy trading came as traders digested mixed economic and corporate news combined with continued concerns that the swine flu outbreak may become a pandemic.

In economic news, the Conference Board released a report earlier in the day showing that its consumer confidence index increased by much more than expected in April, reflecting a significant improvement in consumers' assessment of the short-term outlook.

The report showed that the consumer confidence index jumped to 39.2 in April from an upwardly revised 26.9 in March. Economists had expected the index to increase to 29.7 from the 26.0 originally reported for the previous month.

Ken Goldstein, an economist at the Conference Board, told RTTNews that the better than expected reading demonstrated that now instead of being very depressed, we're simply just depressed.

Goldstein said, We've started the long climb up from record low levels, but he warned that it's going to be a long, tough and very difficult climb.

Separately, a report from Standard and Poor's showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 18.6 percent in February, a modest deceleration from the 19.0 percent drop in prices that was reported for January.

In other news, the Wall Street Journal reported that regulators are pushing Bank of America (BAC) and Citigroup (C) to raise more capital following early results of the government's stress test analysis, generating some concerns about the results of the tests.

The Journal said that the capital shortfall amounts to billions of dollars at Bank of America. The report specified that executives at both banks are objecting to the preliminary findings from the government's examination.

Meanwhile, an increase in the number of confirmed cases of swine flu has led the World Health Organization to raise the level of its influenza pandemic alert to phase 4. At the same time, the WHO does not recommend that countries close borders or restrict travel.

The major averages moved to the downside in the latter part of the trading day, ending the session just below the unchanged line. The Dow closed down 8.05 points or 0.1 percent at 8,016.95, the Nasdaq closed down 5.60 points or 0.3 percent at 1,673.81 and the S&P 500 closed down 2.35 points or 0.3 percent at 855.16.

Sector News

After seeing substantial weakness in the previous session, airline stocks saw some further downside over the course of the trading day. The Amex Airline Index closed down 2.6 percent, pulling back further off the two-month closing high it set last week.

The continued weakness among airline stocks came as traders continued to express concerns that the swine flu outbreak will lead to reduced global travel. Delta Air Lines (DAL) and UAL Corp. (UAUA) turned in two of the sector's worst performances.

Weakness among banking stocks also contributed to the lower close by the broader markets, with the Kbw Bank Index closing down 2.9 percent. Some selling pressure was generated by the Journal report regarding Bank of America and Citigroup.

Gold stocks also moved sharply lower on the session, moving lower along with the price of the precious metal. With gold for June delivery closing down $14.60 at $893.60 an ounce, the Amex Gold Bugs Index closed down 3.1 percent

While steel, housing, and oil service stocks also posted notable losses, strength among healthcare-related stocks helped to limit the downside for the markets. The Morgan Stanley Healthcare Provider and Healthcare Payor Indices both closed up more than 2 percent.

Despite the lower close by the broader markets, some strength was also visible among biotechnology, networking, and real estate stocks.

Dow Components

A slim majority of the Dow components ended the session in negative territory, contributing to the modest loss posted by the blue chip index. General Motors (GM) helped to lead the way lower, closing down 11.3 percent after ending Monday's trading up 20.7 percent.

Bank of America and Citigroup also posted notable losses following the Journal report, closing down 8.6 percent and 5.9 percent, respectively. Additionally, Microsoft (MSFT) closed down 2.3 percent, pulling back further off the more than four-month closing high it set on Friday.

While Alcoa (AA) and Caterpillar (CAT) also closed firmly in the red, a strong gain by IBM (IBM) helped to limit the downside for the Dow. Shares of IBM closed up 2 percent after the company raised its dividend by 10 percent and added $3 billion to its stock buyback program.

Kraft (KFT) and Exxon Mobil (XOM) were among the other Dow components that posted notable gains, closing up 1.9 percent and 1.4 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed considerably lower on Tuesday amid continued concerns about the economic impact of the swine flu outbreak. Japan's benchmark Nikkei 225 Index showed a notable decline, closing down 2.7 percent.

The major European averages also showed notable weakness, although they closed off their intraday lows. The U.K.'s FTSE 100 Index and the French CAC 40 Index both fell 1.7 percent, while the German DAX Index closed down 1.9 percent.

In the bond market, treasuries saw considerable weakness over the course of the trading day, pushing the yield on the benchmark 10-year note up 8.1 basis points to 3.002 percent, above the psychologically important 3.0 percent level.

Looking Ahead

Gross domestic product data for the first quarter will be released at 8:30 am ET on Wednesday, headlining a busy day on the economic front. Economists expect the GDP report to show a 4.7 percent decrease in the first quarter following a 6.3 percent decrease in the fourth quarter.

The Federal Reserve also concludes its two-day meeting on Wednesday, with the Federal Open Market Committee due to announce the results of the meeting at about 2:15 pm ET. The Fed is widely expected to leave interest rates unchanged.

Additionally, Burger King (BKC) is expected to report its quarterly earnings before the bell along with Wyeth (WYE), Aetna (AET), General Dynamics (GD) and Time Warner (TWX).

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