A drop in consumer confidence to a 10-month low drove U.S. stocks down on Tuesday as investors reassessed the strength of the economic recovery.

Energy and materials companies led the decline as oil and other commodity prices slipped. Aluminum producer Alcoa Inc fell 3.1 percent to $13.12.

Concerns about the economy also hurt technology shares. Chipmaker Intel Corp was down 2.7 percent to $20.31 and the S&P information technology sector <.GSPT> fell 1.8 percent.

Consumer confidence, as measured by the Conference Board, fell in February as consumers' short-term outlook on jobs worsened. Separately, the monthly Standard & Poor's/Case-Shiller index of home prices unexpectedly slipped in December.

Investors will probably conclude from this that the economy is likely to weaken as the year progresses, said Carmine Grigoli, chief U.S. investment strategist at the equities division of Mizuho Securities USA in New York.

You need better consumer confidence and employment gains to really build a sustainable economic recovery and that's not in the cards in the near term.

The Dow Jones industrial average <.DJI> fell 88.72 points, or 0.85 percent, to 10,294.66. The Standard & Poor's 500 Index <.SPX> lost 13.70 points, or 1.24 percent, to 1,094.31. The Nasdaq Composite Index <.IXIC> dropped 35.95 points, or 1.60 percent, to 2,206.08.

The losses reversed stocks' recent trend. The broad S&P 500 index has risen in four of the past five trading days and posted weekly gains in the last two weeks.

Tuesday's weak economic data overshadowed stronger-than-expected quarterly earnings from retailers, including Home Depot Inc . The largest U.S. home improvement chain beat estimates and raised its profit forecast, sending its shares up 2.1 percent to $30.95.

Department store chain Macy's also forecast better sales in 2010, lifting its shares 0.4 percent to $18.54.

But discount retailer Target Corp shares fell 0.7 percent to $50.30 even as it posted a quarterly profit slightly above Wall Street's expectations, as investors had hoped for a bigger improvement.

The U.S. economic data followed an unexpected decline in business sentiment in Germany, which hurt overseas markets.

Investors braced for Federal Reserve Chairman Ben Bernanke's testimony before congressional committees on Wednesday and Thursday where he is likely to be asked about the

Fed's surprise hike in an emergency bank interest rate.

(Editing by Kenneth Barry)

Germany Ben Bernanke