Stock Market News for July 1, 2009

US stocks fell Tuesday after a surprise decline in consumer confidence sparked a sell off on the Street, but the S&P 500 managed to end the quarter with a 15.2% gain, its best quarterly performance in more than a decade.  Also hurting the sentiment was a report from the Labor Department which noted unemployment rate jumped in all 372 metropolitan areas.        

Stocks touched multi-month highs during the quarter, with the S&P surging 40% after plunging to 12-year lows on March 9.  The period from mid-March to mid-June saw the Dow average shooting up 34% on hopes that the US economy was coming out of a recession.  However, rising yields, worries of inflation and dismal economic numbers during the past two weeks failed to provide further boost to sentiments on the Street and the rally fizzled out.  Nevertheless, fears of a complete failure of the financial system were shrugged off by investors and many analysts believe stocks are on a more solid ground than they were before.  Tech-laden Nasdaq was by far the best performer, recording its fourth straight monthly gain.

On Tuesday, the Dow Jones Industrial Average fell 82.38 points, or 1%, to 8,447.00; the S&P 500 declined 7.90 points, or 0.9%, to 919.33, and the Nasdaq slid 9.02 points, or 0.5%, to 1,835.04.  On the New York Stock Exchange, declining issues beat advancing stocks three to two. 

The market's climb over the past quarter was led by a 30% jump among financial shares, 25% among basic material issues, 21% among technology stocks, and 21% among the industrials.  After plunging to 17-year lows in early March, financials have staged a spectacular comeback surging 97% amid hopes that the worst of the banking crisis is over. 

On Tuesday, the June Consumer Confidence index from the Conference Board, a private research group, declined to 49.3, from a revised 54.8 in May and was well below projections off 55.3.  After the Conference Board reported the figures, Caterpillar Inc. (NYSE:CAT - Analyst Report) dropped 4.9% to $33.04; Expedia Inc. (NASDAQ:EXPE - Analyst Report) lost 5.1% to $15.11 and Starbucks Corp. (NASDAQ:SBUX - Snapshot Report) declined 5.1% to $13.89.  All ten industry groups on the S&P 500 recorded declines, even as a home price gauge showed a lessening rate of decline and manufacturing barometer which indicated June's contraction was less than the prior month's and better than projected.       

Among Fed speakers, Evans speaks on the credit crunch at 11:15 AM ET today, following yesterday's remarks by Fed's Bullard, who noted, "I think deflation risks are abating," and Hoenig, tackling the question of "too big to fail," who noted "It will not be realistic for any authority in any regulatory structure to oversee a system where incentives remain to take on excessive risk." Janet Yellen suggested the Fed could hold interest rates near zero for the next several years, advising, "I expect that we will turn the growth corner sometime later this year, but I am not optimistic that the economy will spring back to normal anytime soon," adding further that unemployment will "remain painfully high for several more years."