Major U.S. stock indexes turned lower in morning trading Tuesday. The Federal Reserve kicked off its two-day policy meeting that is expected to result in a 25 basis point rate cut, followed by a pause in further easings.
Traders weighed reports that the S&P Case-Shiller home price index fell by a record 12.7% in February from a year earlier, and the Conference Board's April Consumer Confidence index fell to 62.3 from 65.9.
Pharmaceutical giant Merck (MRK) was down following the rejection of a cholesterol drug by an FDA panel. Oil stocks were higher on strong earnings reports from industry players.
Bonds were higher, as was the dollar index. Gold futures were lower. Oil futures were down.
On Tuesday, the blue-chip Dow Jones industrial average fell 55.85 points, or 0.43%, to 12,815.90. The broader S&P 500 index declined 7.41 points, or 0.53%, to 1,388.96. The tech-heavy Nasdaq composite index shed 8.26 points, or 0.34%, to 2,416.14.
The U.S. S&P/Case-Shiller home price index (20 cities) fell 2.6% from the preceding month to 175.94 in February, and is now down a record 12.7% over last year. This comes after a 10.7% plunge in January. All 20 cities posted declines over last month, with weakness paced by a 5.0% monthly decline in San Francisco, a 4.8% drop in Las Vegas, and a 4.3% drop in Los Angeles. Only one city showed a year-over-year increase -- Charlotte (+1.5%). Ten of the 20 cities in the index have seen double-digit year-over-year price declines. The biggest declines were in Phoenix, Miami and Las Vegas, down 20.8%, 21.7% and 22.8%, respectively.
The data give more evidence that the housing crisis is still getting worse, as the pace of house price declines continues to accelerate, says S&P Economics.
U.S. consumer confidence slid lower to 62.3 in April, from a revised 65.9 in March (64.5 previously). It was 106.3 a year ago. This is a fourth straight monthly decline, though it's not quite as bad as the sub-60 figure rumored just ahead of the release, according to Action Economics. The present situations index dropped to 80.7 from 90.6 in March (revised from 89.2). The expectations index inched up to 50.1 from 49.4 (revised from 47.9). Meanwhile, the year-ahead average inflation index climbed to 6.8% from 6.1% in March. It was 5.1% a year ago. The labor differential (jobs plentiful minus jobs hard to get) plunged to -11.5, from -5.3.
Energy futures were lower Tuesday as a strike by Scottish oil workers ended. But Nigerian disruptions are still keeping about 800,000 barrels of oil out of circulation. June NYMEX crude futures traded as low as $115.80 per barrel, down as much as $2.95, before recovering to $116.60.
Among Tuesday’s stocks in the news, Merck received a Not Approvable action letter from the FDA for its New Drug Application (NDA) for MK-0524A for the treatment of primary hypercholesterolemia or mixed dyslipidemia. The drugmaker lso reaffirmed its 2008 financial guidance.
Energizer Holdings (ENR) reported second quarter EPS of $1.03, vs. $1.14 one year earlier, as higher costs offset a 30% sales rise.
MasterCard (MA) posted first-quarter GAAP EPS of $3.38, vs. $1.57 one year earlier, on 29% higher net revenue. The company says currency fluctuations (driven by movement of the euro and the Brazilian real relative to the U.S. dollar) contributed 5.1% of the increase in net revenue for the quarter.
Visa Inc. (V) reported second-quarter adjusted EPS (Cl. A shares) of 52 cents on revenue of $1.5 billion. The company says its financial outlook over the next three years includes the following metrics: annual net revenue growth of 11%-15%; annual adjusted operating margin in the low 40% range; annual adjusted EPS growth of 20% or greater; and annual free cash flow in excess of $1 billion.
Corning (GLW) reported first-quarter EPS of 44 cents (excluding a special item), vs. 40 cents one year earlier, on a 24% sales rise. The company sees second-quarter EPS of 47-50 cents (excluding a special item) on $1.71-$1.75 billion in sales.
Archer-Daniels-Midland (ADM) reported third-quarter EPS of 80 cents, vs. 56 cents, on a 64% revenue rise.
Treasury market
Treasury yields steadied near session lows Tuesday morning after the April consumer confidence number was not as bad as rumored or forecast, but still hit the lowest level since March, 2003, reports Action Economics. The 10-year yield drifted below 3.80% ahead of the data, but didn't react much upon its release.