A worse-than-expected drop in consumer confidence pushed U.S. stocks lower on Tuesday as investors worried over what remains one of the weakest areas of the economy.
Data showed consumer confidence in February slumped to a 10-month low as consumers' short-term outlook on jobs worsened. Separately, the monthly Standard & Poor's/Case-Shiller index of home prices unexpectedly slipped in December, adding to concerns over the sustainability of the economic recovery.
There's a bit of an adjustment process in terms of the growth outlook as to what is going to be the major driver, said Nick Kalivas, vice president of Financial Research & Senior Equity Index Analyst at MF Global in Chicago.
The consumer does not look to be the major driver. It's going to be more business-driven. (But) given the unease about the consumer and the government sector, businesses may not be that willing to do a lot of spending.
Top performers during last year's rally, including technology, materials and energy stocks, led the downside on Tuesday. Oil futures fell nearly 2 percent to $78.86 a barrel, pulling the S&P energy index <.GSPE> down by 1.5 percent. Bellwether Caterpillar Inc
Chipmaker Intel Corp
The economic outlook gets adjusted down, certainly the materials and semis would be the places to see selling, said Kalivas.
The weak data added to a market already jittery about what Federal Reserve Chairman Ben Bernanke might say about the central bank's intentions at congressional hearings this week.
The Dow Jones industrial average <.DJI> tumbled 100.51 points, or 0.97 percent, to 10,282.87. The Standard & Poor's 500 Index <.SPX> fell 14.11 points, or 1.27 percent, to 1,093.90. The Nasdaq Composite Index <.IXIC> shed 31.07 points, or 1.39 percent, to 2,210.96.
German business confidence fell unexpectedly for the first time in almost a year, setting an early negative tone. The day's losses reversed stocks' recent trend and put the S&P 500 on track for its worst decline in almost three weeks.
The broad index has risen in four of the past five trading days and posted weekly gains in the last two weeks.
The weak U.S. economic data overshadowed stronger-than-expected quarterly earnings from retailers, including Home Depot Inc
But discount retailer Target Corp
Investors braced for Bernanke's testimony before congressional committees on Wednesday and Thursday, when he is likely to be asked about the Fed's surprise hike in an emergency bank interest rate last week.
(Editing by Jeffrey Benkoe)