Stocks ended mixed Tuesday as energy stocks rose along with oil prices. But consumer-discretionary and tech stocks declined.
Stocks had opened higher after upbeat housing and earnings reports and as the dollar retreated, then fell after a disappointing confidence report.
The Dow Jones Industrial Average managed to pull off a gain, advancing 14.21, or 0.1 percent, to close at 9,882.17. But the S&P 500 and Nasdaq declined, with the Nasdaq falling more than 1 percent as investors booked profits in the tech sector.
Volatility is also returning to the market: The CBOE volatility index, widely considered the best gauge of fear in the market, ticked higher to near 25.
The stock market has become overheated since rebounding off its March lows and is due for a correction, said David Rosenberg of Gluskin Sheff. Rosenberg used to be the chief economist at Merrill Lynch.
The market "is overvalued by at least 20 percent," Rosenberg said on CNBC this morning. "But it comes down to what your view in corporate earnings (is) going to be. By the time you're up 60 percent from any egregiously oversold low, you've already got the earnings recovery."
The Conference Board's gauge of consumer confidence fell to 47.7 in October from an upwardly revised 53.4 in September. Economists had expected the gauge to hold steady.
Consumer discretionary stocks took a hit from the report: Wynn Resorts, clothing retailer VF Corp. and Starbucks were among the sector's biggest decliners.
And investors flocked to the relative safety of the dollar: The U.S. currency hit a two-week highagainst the euro.
Some encouraging news on the housing front: The S&P/Case-Shiller home-price index rose for a fourth straight month, beating expectations. Still, homebuilders didn't get a boost amid worries about waning consumer confidence and as the first-time homebuyers' tax credit hangs in the balance.
The government continued its record week of auctions with the sale of $44 billion in 2-year notes, which was met with strong demand. On Wednesday will see the sale of $41 billion in 5-year notes, followed by $31 billion in 7-year notes on Thursday.
On Monday, the Dow posted its first back-to-back triple-digit dropssince June as the markets were impacted by a rising dollar, falling commodity prices, and other factors.
Among the biggest decliners on the Nasdaq were Chinese portal Baidu and Apple as investors locked in profits — and as Baidu's disappointing outlook weighed on the sector. U.S. rival Google also declined.
There was a lot of weakness in techs but IBM was one of the bright spots: The stock rose 0.5 percent after the computer and services company said it was adding $5 billion to its stock-repurchase plan, bringing the total to $9.2 billion.
American Express was once again the biggest gainer on the Dow, up over 3 percent. The stock is on a tear: It's up over 70 percent from its March low. Last week, the credit-card provider beat earnings expectations, helped by cost-cutting, stabilizing consumer spending and a decline in the percentage of unpaid accounts.
After the bell today, rival Visa also topped forecasts, raised its dividend and announced a stock-buyback plan.
Dow energy components ExxonMobil and Chevron advanced as oil rose, settling at $79.55 a barrel. Both of those companies are set to report earnings later this week.
In today's earnings news, TD Ameritrade and US Steel were among companies reporting earnings that beat analyst expectations.
US Steel posted a loss of $2.11 a share that was considerably less than the $2.87 that analysts expected. TD Ameritrade posted a $0.26 profit on record organic growth.
Energy giant BP also contributed to the move higher, posting a profit drop of 34 percent that beat analyst estimates, driven by aggressive cost-cutting.
U.S.-traded shares of Honda gained nearly 5 percent after the Japanese auto maker nearly tripled its yearly profit forecast.
Ford shares fell nearly 2 percent after UAW workers at its Kansas City assembly plantrejected tentative contract changes designed to bring Ford's costs in line with those at GM and Chrysler.
Volume was slightly below average, with about 1.4 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 2 to 1.
Still to Come:
WEDNESDAY: Weekly mortgage applications; durable-goods orders; new-home sales; weekly crude inventories; executive-compensation hearing; Earnings from ConocoPhillips, GlaxoSmithKline and General Dynamics
THURSDAY: 80th anniversary of 1929 market crash; Weekly jobless claims; first look at Q3 GDP; Larry Summers speaks in NYC; Earnings from AstraZeneca, ExxonMobil, P&G, Aetna, Kellogg, Motorola and Sprint Nextel
FRIDAY: Personal income and spending; consumer sentiment; Earnings from Chevron
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