Stocks pushed higher but struggled to stay in positive territory for any length of time Tuesday as profit-taking after Monday's blockbuster rally overshadowed a fifth-straight rise in pending-home sales.
Bank and airline stocks were among the day's bright spots, while investors sold tech, materials and energy stocks after Monday's run that sent the S&P over 1,000for the first time since November.
Pending-home sales jumped 3.6 percentin June, blowing past expectations for a 0.6-percent increase. It was the fifth straight monthly gain and the longest such streak in six years.
It will still take a few months for actual sales to catch up to pending-home sales as some deals that are signed and recorded as pending fail to close because of low appraisal values, Ian Shepherdson, chief U.S. economist of High Frequency Economics, pointed out in a note to clients after the report was released. "[B]ut the key message from the index is that volumes are picking up," he said.
In the morning's other economic news, consumer spending rose 0.4 percentin June, slightly more than expected, helped by spending on nondurable goods. Inflation also played a role: Adjusted for inflation, spending fell 0.1 percent. Income fell 1.3 percent, the biggest drop in four-and-a-half years.
Big deal news this morning: PepsiCo has agreed to buy its two biggest bottlers. The soft-drink and snack company will pay $36.50 a share for Pepsi Bottling Group and $28.50 a share for PepsiAmericas. The combined value of the deals is about $7.8 billion.
And from the oh-to-be-a-fly-on-the-wall file: Treasury Secretary Tim Geithner issued an "expletive-laced" warning to top regulators to stop the public criticism of Obama's financial-regulation plan, according to a front page article in today's Wall Street Journal. Attending the tense hourlong meeting were Fed Chairman Ben Bernanke, SEC Chairman Mary Schapiro and FDIC Chair Sheila Bair.
Bank of America ticked higher. The stock was one of Monday's biggest gainers following news that the bank has agreed to pay $33 million to settle charges by the SEC that it made false and misleading statements during the Merrill Lynch acquisition and that it has hired Sallie Krawcheck, the former CFO of Citigroup, to lead its global wealth and investment-management unit, as a prelude to finding a successor to CEO Ken Lewis.
Goldman Sachs was also among the handful of gainers in the banking sector following a report in the New York Post that management has told employees to avoid any big-ticket purchasesto avoid any perception that the bank is "living high on the hog" amid allegations that it played a key role in creating the current financial crisis.
General Electric shares skidded after the conglomerate said it has agreed to pay $50 million to the SEC to settle accounting-fraud charges. The company, also the parent of CNBC, neither admitted nor denied wrongdoing.
Autos are expected to be back in the news as the House approved another $2 billion for the "Cash for Clunkers" program and the measure now moves to the Senate for a vote by the end of the week. Senate Democrats are having a hard time shoring up Republican support.
Ford added to their gains from Monday, when the automaker reported its first positive sales report in two years, helped by the "Clunkers" program.
American depositary shares of Toyota fell, even as the Japanese automaker slashed its projected lossfor the full year.
EBay's shares fell after an outage affecting its PayPal service, which took it down for about an hour yesterday. The company blames the outage on "internal" problems.
In this morning's earnings, CVS Caremark reported its profit rose and raised its outlook.
Duke Energy reported its profit took a hitin the latest quarter from the ebb in oil prices.
Oil slipped Tuesday but remained above $70 a barrel.
TUESDAY: Earnings from Kraft, Electronic Arts after the bell
WEDNESDAY: Weekly mortgage applications; Challenger, ADP reports on jobs; ISM services index; factory orders; weekly oil inventories; Earnings from P&G, Cisco, News Corp. and Prudential
THURSDAY: Chain-store sales; weekly jobless claims; Earnings from Sirius XM, Unilever
FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media
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