Wall Street dips as consumer shares weigh
Stocks fell on Tuesday on worries that rising food costs will sap supermarket profits, hurting consumer stocks and denting growing optimism about the economic outlook.
Shares of Supervalu Inc
We're light on consumer staples. One of our concerns is commodity prices are going to bite into profits, said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas.
Materials were the biggest losers, with the S&P materials index <.GSPM> falling 1.1 percent, as metals prices dropped after recent gains.
The market's pause followed a strong start to the new year on Monday and a robust rally through the end of 2010. The Dow and S&P 500 recently hit two-year highs as economic data pointed to solid U.S. recovery.
The Dow Jones industrial average <.DJI> gained 2.23 points, or 0.02 percent, to 11,672.98. The Standard & Poor's 500 Index <.SPX> dropped 4.66 points, or 0.37 percent, to 1,267.21. The Nasdaq Composite Index <.IXIC> fell 15.46 points, or 0.57 percent, to 2,676.06.
S&P 500 fourth-quarter earnings are forecast to rise about 31 percent from a year ago, according to Thomson Reuters data.
While many analysts see another year of gains for the S&P 500, Morgan Stanley offered a more contrarian view, forecasting a year-end target for the S&P 500 below the close for 2010.
Monday's move was accompanied by a rise in volume, with more than 7.7 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq -- above the 50-day moving average. The pace held strong for a second day, with 3.27 billion shares traded near midday.
Financial shares pulled back after leading gains Monday, with the S&P financial sector <.GSPF> falling 0.4 percent.
Shares of Supervalu dropped 6.7 percent to $8.96, while Safeway was down 3.3 percent at $21.76, and Whole Foods fell 4 percent at $48.74.
Investors will look into Federal Open Market Committee minutes from the December 14 meeting for clues on the U.S. central bank's outlook on the economy. The minutes are due at 2 p.m. EST.
(Reporting by Caroline Valetkevitch; additional reporting by Rodrigo Campos; editing by Jeffrey Benkoe)
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