Stocks fell on Tuesday as a surprise drop in a gauge of consumer confidence overshadowed signs of stabilization in housing and solid earnings from Walgreen Co .

With the third quarter drawing to a close, trading was volatile and volume light.

Stocks started higher but then turned lower as the Conference Board's Consumer Confidence Index for September fell, underscoring concerns about personal finances amid the worst job market in 26 years.

Even so, investors were reluctant to sell, and trading shifted between small losses and break-even for most of the session following Monday's rally when the S&P 500 index rebounded to snap a three-day losing streak.

You had a bit of mixed economic data and the market is a little bit mixed too, said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut. There were big gains yesterday, so it's not surprising to see a little bit of a pullback.

The Dow Jones industrial average <.DJI> dropped 47.16 points, or 0.48 percent, to 9,742.20. The Standard & Poor's 500 Index <.SPX> shed 2.37 points, or 0.22 percent, to 1,060.61. The Nasdaq Composite Index <.IXIC> dipped 6.70 points, or 0.31 percent, to 2,124.04.

After the bell, Nike Inc posted a quarterly profit that beat Wall Street's forecasts, sending its stock up 4 percent. Nike shares had ended the regular session up 1.9 percent at $60.09.

Major drags included some of the stellar performers in Monday's run-up, including manufacturer 3M Co , off 1.4 percent to $73.94 and network equipment maker Cisco Systems Inc , down 1.3 percent at $23.30. Apple Inc declined 0.4 percent to $185.38.

The semiconductor index <.SOXX> shed 1.4 percent after rising 2.1 percent on Monday.

Retreating oil prices weighed on energy shares, with Chevron off 1.1 percent at $70.91. U.S. front-month crude settled down 13 cents at $66.71 a barrel.

But shares of Walgreen jumped 9.2 percent to $37.35 after the largest U.S. drugstore chain reported a quarterly profit that topped expectations. The S&P food & drug retail industry index <.GSPFDGR> rose 1.6 percent.

An improved S&P/Case-Shiller home price index reading that hinted at stabilization in the housing market lifted the Dow Jones home construction index <.DJUSHB> up 0.5 percent during the regular session.

Shares of Moody's Corp and The McGraw-Hill Companies Inc jumped after Piper Jaffray analysts said the rating agencies were in a favorable position as debt issuance improved substantially in September year-over-year.

Moody's jumped 10.9 percent to $20.81 on the NYSE and McGraw-Hill, parent of Standard and Poor's, rose 7.3 percent to $26.11.

Window dressing -- when fund managers sell laggards in favor of outperformers to spruce up portfolios -- tends to make quarter-end trading volatile.

The S&P 500, up 15.4 percent so far this quarter, is making a run for its best quarterly performance since the fourth quarter of 1998. The benchmark index has rallied nearly 60 percent from the 12-year low of early March.

A year ago on Tuesday the Dow suffered its biggest slide ever when it plunged 778 points after U.S. lawmakers first rejected a $700 billion financial bailout.

Volume was light, with about 1.18 billion shares changing hands on the New York Stock Exchange, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.10 billion shares traded, below last year's daily average of 2.28 billion.

Declining stocks outnumbered advancing ones by a ratio of about 8 to 7 on the NYSE, while on Nasdaq, about seven stocks fell for every five that rose.

(Editing by Kenneth Barry)

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