RTTNews - After moving modestly higher in early trading on Tuesday, stocks have shown a notable move to the downside over the course of the morning. The major averages have pulled back well off their highs for the session and into negative territory.

The downturn by the markets came after the Conference Board released a report showing an unexpected deterioration in consumer confidence in the month of June. The decrease reflected less favorable assessments of both current conditions and the near-term outlook.

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.

While a separate report released by the Institute for Supply Management - Chicago on Tuesday showed a continued contraction in Chicago-area manufacturing activity in June, the pace of contraction slowed by even more than economists had been expecting.

The ISM - 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 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. This represented a drop of 18.1 percent compared to the same period last year.

On the corporate front, chipmaker Broadcom (BRCM) announced that it raised its tender offer to acquire all of the outstanding shares of common stock of Emulex (ELX) to $11.00 per share in cash, representing a total equity value of about $912 million. Emulex said that its Board of Directors would review the terms of the revised offer.

In earnings news, private education firm Apollo Group (APOL) 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.

Further, tax preparer H&R Block (HRB) reported net income for the fourth quarter 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 major averages are currently posting steep losses, just off their worst levels of the day. The Dow is currently down 102.86 at 8,426.52, the Nasdaq is down 12.72 at 1,831.34 and the S&P 500 is down 11.44 at 915.79.

Sector News

Notable weakness has emerged among airline and gold stocks, with the NYSE Arca Airline Index and the NYSE Arca Gold Bugs Index dropping by 3.3 percent and 3.5 percent, respectively. The indices are giving back some of their recent gains but remain stuck in their respective ranges.

Leading the airline sector lower have been shares of AMR (AMR) and UAL (UAUA), which have both fallen by 7 percent on the day. Specifically, the decline in AMR has come after the firm announced its intent to raise $520 million in new capital via ten-year notes to pay for its acquisition of 16 new Boeing planes.

Other stocks pulling back on the day include steel, banking, healthcare provider, and tobacco stocks. The NYSE Arca Steel Index and the Kbw Banking Index are sliding by 2.2 percent and 2.0 percent, respectively.

The banking sector is being hurt by shares of Zions Banking (ZION), which are down by 6 percent, and Marshall Ilsley (MI), which have fallen by 6.4 percent. The stocks have resumed their downward moves after being in a range for the past week.

While Zion is poised to close at its worst level in nearly two months, Marshall Ilsley is looking to finish at its worst price in over three months.

Stocks Driven By Analyst Comments

Despite the pullback by the broader markets, Choice Hotels International (CHH) is moving higher in mid-morning trading after Wachovia upgraded the stock to Outperform from Market Perform. The stock is up by 2.6 percent, reaching its best intra-day price in just under a month.

On the other hand, Southern Co. (SO) is under pressure after being downgraded by Citigroup from a Buy to Hold. The broker stated that the utility company may find difficulty obtaining increased rates amid the current recessionary economic climate. The stock is downy by 3.8 percent, pulling back further off the four-month closing high set on Friday.

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 are now firmly on the downside, with the German DAX Index and French CAC 40 Index down by 1.3 percent and 2.1 percent, respectively. The U.K.'s FTSE 100 Index is also sliding, showing a decrease of 1 percent.

In the bond markets, treasuries continue to see notable weakness but have moved off of their worst levels of the day. Subsequently the yield on the benchmark ten-year note is trading at 3.533 percent, seeing a climb of 4.1 basis points on the day.

For comments and feedback: contact editorial@rttnews.com