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Mood Swing Clips Stocks; Oil Falls

Stocks skidded Tuesday after a report showed consumer confidence is waning amid worries about the job market.

It was a struggle all morning as investors juggled another batch of disappointing earnings results against an encouraging report on the housing market.

Stocks had also struggled on Monday but managed to squeeze out a gain as banks got a boost from a rise in new-home sales.

The Conference Board reported its gauge of consumer confidence fell to 46.6in July from 49.3 in June. It was the second straight drop and came as a disappointment as economists had expected the gauge to hold steady around 49, according to a Reuters survey.

Investors shrugged off today's encouraging reading on the housing sector: The S&P/Case-Shiller Home Price index posted its first month-over-month increase in nearly three yearsin May, though prices were still down sharply from a year earlier.

San Francisco Federal Reserve President Janet Yellen will have a speech on the U.S. economic outlook in Idaho at 12:35 pm, and the Treasury will auction 2-year notes today with results expected shortly after 1 pm.

The trading floor was buzzing about a report from the front-page of today's Wall Street Journal that said regulators plan to issue a report next month that trader speculation was to blamefor last year's spike in oil prices.

Bank of Americadenied another report in the Wall Street Journalthat suggested it plans to reduce its 6,100-branch network by about 10 percent, after two decades of expansion. A company spokesman said the company did plan to pare its network but not by that much.

General Electric was among the biggest gainers on the Dow after the company announced it won't need to raise capitalfor its troubled GE Capital financing arm. The parent of CNBC.com said that even in "adverse scenarios" there would be no need for outside funds.

On the earnings front, Viacom reported a sharp drop in earnings, as the owner of MTV Networks and Paramount film studios said they were hit by poor advertising revenue and a dropoff in its videogame and DVD sales.

Office Depot delivered results that fell short of analysts' expectations. Leather-handbag maker Coach hit its target but sales and margins declined.

Shares of Amgen rose after the company late Monday beat earnings expectations, helped by an arthritis drug and a tax benefit. The biotech giant also raised its full-year outlook.

Shares of Mylan rebounded after the generic drug maker said the FDA had found only a minor deviation from standard procedures at its main plant in West Virginia. The stock had dropped 13 percent on Monday following news of a quality-control issue at the plant, the latest in a string of deficiences found at generic drug makers.

And there was more merger news from the tech sector: IBM hasagreed to buy SPSS, which makes analytics software, for $1.2 billion, or $50 a share. SPSS shares soared. IBM slipped.

This came a day after news that Agilent Technologies plans to buy scientific-instrument maker Varian for $1.5 billion, or $52 a share in cash. And Swedish telecom Ericsson recently agreed to buy Nortel's wireless unitfor $1.13 billion.


The big earnings reports to watch this week will be from major energy companies.

BP started the chain, as Europe’s second largest oil company reported its profit was cut in half by lower oil prices and weaker refining margins. The company also increased its cost-cutting target for 2009 by 50 percent.

Later in the week, we'll get reports from Chevron, ExxonMobil, ConocoPhillips and Royal Dutch Shell.

So far this earnings season, companies beating expectations have outnumbered the misses by a ratio of 5 to 1, the highest since 2004, according to analysts at Birinyi Associates.

Among the biggest beats so far were Goldman Sachs, miner Freeport-McMoRan Copper & Gold and flash-memory maker SanDisk.


Still to Come:

TUESDAY: Senate Judiciary Committee votes on Sotomayor nomination; Earnings from Dreamworks and STMicro after the bell
WEDNESDAY: Weekly mortgage applications; durable goods; weekly crude inventories; Fed's beige book; Earnings from ConocoPhillips, Sprint Nextel, Time Warner, WellPoint Health, Visa
THURSDAY: Weekly jobless claims; Earnings from AstraZeneca, ExxonMobil, Colgate-Palmolive, Eastman Kodak, Kellogg, MasterCard, Motorola, Disney, MetLife
FRIDAY: GDP; Chicago PMI; Earnings from Chevron

Send comments to cindy.perman@nbcuni.com.