U.S. stocks fell on Tuesday after U.S. consumer confidence data showed a surprise drop, raising doubts about the speed of an economic recovery, and falling oil prices sank energy shares.
The Conference Board's U.S. consumer confidence index fell in June, versus expectations of an increase, sparking investor concern about how quickly consumers will resume spending.
The confidence data underscored an economy still in trouble and cast a shadow over earlier reports that suggested the downward spiral may be moderating. The stocks selloff was broad, hitting all of the S&P's ten sectors.
(The consumer confidence data) kind of took the wind out of things a little bit, said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.
Everybody is trying to connect the dots in terms of positive economic data, or at least data that is just in decelerating decline. This one kind of came out of left field
Crude oil futures fell 3.2 percent to below $7O per barrel as a stronger U.S. dollar rose against a basket of currencies. <.DXY>
Lower crude prices hit shares of energy companies such as Chevron Corp
The Dow Jones industrial average <.DJI> fell 94.02 points, or 1.10 percent, at 8,435.36. The Standard & Poor's 500 Index <.SPX> lost 10.18 points, or 1.10 percent, at 917.05. The Nasdaq Composite Index <.IXIC> dropped 8.59 points, or 0.47 percent, at 1,835.47.
Still, the S&P 500 is up 14.9 percent so far this quarter, putting it on track for its best period since the fourth quarter of 1998, when the index jumped nearly 21 percent.
Separate reports showed U.S. single-family home prices fell in April but the pace of decline moderated, and business activity in the Midwest contracted again in June but at a less severe rate.
On this last day of the quarter, fund managers are expected to enhance portfolios as part of window dressing by selling losing stocks and scooping up winners. The process may add to volatility.
Analysts noted that a shortened trading week could also lead to increased volatility as well as thinner volumes. U.S. markets will be shut for the U.S. Independence Day holiday on Friday.
The S&P 500 has gained 35.6 percent since hitting a 12-year closing low on March 9, as early signs of an economic rebound surfaced.
(Reporting by Edward Krudy; additional reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)