Stocks Struggled as Consumer Confidence fell. DuPont Rallied. Dow Laggards: AXP, HD, CSCO, CAT, and UTX

Published on Tuesday, 27 July 2010 19:42 Written by Christopher Lynn

New York, July 27^th (TradersHuddle.com) – Stocks struggled as better than expected results from some of Europe’s biggest banks and a blockbuster earnings report from DuPont were outweighed by a report that showed consumer confidence falling to a 5-month low.

The market had a strong start as better than expected corporate results from European banks UBS (NYSE:UBS) and Deutsche Bank (NYSE:DB) boosted sentiment in the financial sector. Also before the open DuPont (NYSE:DD), the U.S. third largest chemical maker and Dow component handily beat analysts’ expectations on both the bottom and top line.

But a report from the Conference Board showed its consumer confidence gauge for July falling to 50.4, which is down from the upwardly revised 54.3 that had been recorded for the prior month and below the 61.0 that had been widely expected. Stocks saw some bounce after the news, but it quickly faded as weakness in retailers and other consumer discretionary stocks, along with cyclical industrial plays pushed the major benchmark stock indices lower.

Choppy trade, with market moving sideways in tight trading range developed in the afternoon with the broad market index finishing practically flat for the session, and the Dow Jones Industrial Average eking a gain, helped by a jump in DuPont shares.

Consumer discretionary, industrials, and materials were the weakest performers. Utilities, Staples, and telecom posted the best gains among the 10 S&P 500 key sectors.

Retailer stocks, pushed the consumer discretionary lower to post a 1.2% loss, as market participants sold the sector on the premise that lower consumer confidence will translate in lower consumer spending in the future. Home Depot (NYSE:HD), the largest home improvement retailer in the world, fell 1.41% to $28.58, posting the second biggest percentage decline in the Dow Jones Industrial Average.

Also affected by the lower consumer confidence numbers, and concern that spending will falter, American Express (NYSE:AXP), the credit card issuer, was the worst Dow component, as shares slid 1.94% to $44.55.

Industrial stocks fell 0.8% as investors moved away from cyclical and recovery plays on concern the consumer confidence will derail the pace of the economic recovery, with Caterpillar (NYSE:CAT), the largest maker of earthmoving equipment in the world, posting the fourth largest percentage decline in the blue chip index. Caterpillar shares fell 1.16% to $69.18.

United Technologies (NYSE:UTX), the largest maker of elevators and air conditioners, was the fifth worst Dow component as shares fell 0.70% on sector weakness.

Energy stocks fell 0.4% for the day; with crude oil prices fell 1.8% to $77.50 per barrel, as the consumer confidence index weighed on the market on concern fuel demand might falter. BP (NYSE:BP), the embattled energy giant, reported a steep second quarter loss, as the company took a charge related to the oil spill in the Gulf. The energy producer also announced plans to sell up to 30 billion in assets during the next 18 months and confirmed that CEO Tony Hayward will step down in October and be replaced by Robert Dudley, the American citizen that was put in charge of the oil spill containment and clean up efforts.

And Cisco Systems (NASDAQ:CSCO), the networking giant, fell 1.31%, posting the third biggest decline in the blue chip index.