Stocks fell on Tuesday after disappointing results from Dow component Procter & Gamble and weak economic data, but a bullish profit and outlook from Pfizer, the world's largest drugmaker, helped limit losses.

Procter & Gamble Co
fell 3.7 percent to $59.78 and was the top drag on the Dow after the consumer goods maker reported fourth-quarter earnings that missed expectations.

But Pfizer Inc
posted higher-than-expected profit and stood by its longer-term forecast, sending the stock up 5.5 percent to $16.33.

Markets were off session lows as investors paid renewed focus to a strong earnings season in which three-fourths of companies beat profit expectations, according to the Thomson Reuters Director's Report.

The number of declining stocks outnumbered advancing ones by four-to-one in early trading, but the ratio narrowed to almost even as the session continued.

The tone is positive enough that good results are having just as much weight as negative ones, said CJ Jones, vice president of capital markets at Nollenberger Capital Partners in San Francisco.

The market seems to be shaking off negative news, and that's a real positive.

The Dow Jones industrial average <.DJI> was down 39.06 points, or 0.37 percent, at 10,635.32. The Standard & Poor's 500 Index <.SPX> was down 5.89 points, or 0.52 percent, at 1,119.97. The Nasdaq Composite Index <.IXIC> was down 11.45 points, or 0.50 percent, at 2,283.91.

Besides P&G's disappointing results, stocks fell on data showing consumer spending and incomes were unexpectedly flat in June. The S&P Consumer Discretionary Sector <.GSPD> fell 1.4 percent while the S&P Retail index <.RLX> lost 1.8 percent.

With spending so weak, it makes me concerned about the retail environment and the same-store sales data we're set to get on Thursday, said John Massey, portfolio manager at SunAmerica Asset Management in Jersey City, New Jersey.

Analysts said the market was ripe for consolidation after Monday's climb to a 10-week high that built on a jump of nearly 7 percent for July -- the best month in a year.

The S&P 500 held above its 200-day moving average of around 1,114, a potentially positive signal. But it was struggling to maintain its grip on the 1,121 mark, the midpoint between the historic high reached in October 2007 and the 12-year closing low hit in March 2009.

Other data included U.S. factory orders, which fell steeply in June, and a plunge in an index of pending home sales to a record low, giving additional evidence that growth assumed a more sluggish tone at the end of the second quarter..

Dow Chemical Co slid 10 percent to $25.42 after it reported a weaker-than-expected second-quarter profit while Archer Daniels Midland Co rose 1 percent to $28.61 after its stronger-than-expected quarterly profit.

U.S.-listed shares of Research in Motion slipped 1.2 percent to $56.28 after it unveiled a new BlackBerry smart phone product in an effort to counter Apple Inc's popular iPhone product.

NPD analyst Ross Rubin said, The operating system has some new touches and integration, but there's nothing here that really represents a leap forward beyond what others are providing.

In sync with Pfizer's strong quarterly results, the S&P healthcare sector index <.GSPA> rose 0.7 percent, while the Morgan Stanley Healthcare Payor Index <.HMO> climbed 1.7 percent.

(Reporting by Ryan Vlastelica; Editing by Kenneth Barry)