U.S. stocks retreat as investors turn cautious

07:25, January 27, 2010      

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Uncertainty about the economic recovery weighed on the market and forced stocks to give up early rallies on Tuesday.

All major indexes finished the day lower. The Dow Jones fell 2. 57, or 0.03 percent, to 10,194.29. The Standard & Poor's 500 index lost 4.61, or 0.42 percent, to 1,092.17 and the Nasdaq dipped 7.07, or 0.32 percent, to 2,203.73.

Financials and energy commodities related stocks helped lead the market lower, with 19 of 30 Dow components declining. The top lagger is JPMorgan Chase, which fell nearly two percent to 38.44 U. S. dollars a share.

Uneasiness about President Barack Obama's plan to tighten regulation of big banks were refreshed after news report said Paul Volcker, head of Obama's Economic Recovery Advisory Board, will testify before Congress next week. Volcker is believed to be the mastermind of the new bank rules proposal, and investors wanted to know more details of it.

Investors' hope for recovery was dampened after rating agency Standard & Poor lowered Japan's sovereign credit rating outlook, which put the country's debt rating in jeopardy. Meanwhile, Britain reported a 0.1 percent increase in its GDP grow in the fourth quarter, the first positive growth in two years, but the pace was slower than economists had expected.

Economic data from U.S. housing market offered little help too. U.S. home prices in major metropolitan areas fell 0.2 percent in November from a month earlier, while the index dropped 5.3 percent over the year, according to the S&P Case-Shiller index.

Dollar gained ground against the euro and other major counterparts on Tuesday, also limiting investors' appetite for riskier assets like equities.

Energy and basic material shares were among the weakest performers on Tuesday as crude futures fell below 75 dollars on the New York Mercantile Exchange.

Market had been fluctuating in the positive area most of the session before losing steam. Companies including Apple, Travelers and DuPont presented solid earnings results, but failed to lift the market.

The Conference Board reported a rise in U.S. consumer confidence for the third consecutive month in January. Its January index of consumer confidence increased to 55.9 from an upwardly revised 53.6 in December, the highest reading since September 2008 when the financial crisis intensified.

The Congressional Budget Office said the federal government budget deficit will come down a little bit and reach 1.35 trillion dollars in current fiscal year, compared with a 1.4-trillion- dollar shortfall in fiscal 2009.

Investors are expecting Fed's latest assessment of the economy after its two-day policy meeting, which concludes on Wednesday. President Obama will give his first State of Union speech on Wednesday as well.

Source: Xinhua
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