Economic data leaves investors skittish

Nervous investors bid stocks lower Tuesday as conflicting economic data prompted them to pull money out of the market ahead of next week’s Federal Reserve decision on interest rates.

With Wall Street concerned about inflation and the Fed’s interest rate policy, the Commerce Department’s report showing a surprise jump in new home sales last month assuaged fears that higher rates would curtail consumers’ willingness to buy homes. And oil prices also fell one day after reaching the $56 level, further easing fears that inflation might take hold.

But a drop in consumer confidence to its lowest level in five months worried investors, and many remained on the sidelines in the hopes that the Fed next week could provide clarity on the economy.

“In a way, this week is kind of a wash, because everyone is going to be holding their breath for the Fed,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers in Boston. “But really, earnings are going in pretty strong and the economy is still growing and moving in the right direction, and stocks look pretty cheap right now.”

The Dow Jones industrial average fell 91.34, or 0.9 percent, to 10,151.13.

Broader stock indicators also moved lower. The Standard & Poor’s 500 index was down 10.36, or 0.9 percent, at 1,151.74, and the Nasdaq composite index lost 23.34, or 1.2 percent, to 1,927.44.

Oil prices retreated for a second session, with a barrel of light crude settling at $54.20, down 37 cents, on the New York Mercantile Exchange. The bond market fell alongside stocks, with the yield on the 10-year Treasury note rising to 4.27 percent from 4.25 percent late Monday. The dollar was mostly higher than other major currencies, and gold prices moved higher.

The markets received some support from home builder stocks, which rose after the Commerce Department reported a surprising jump in new home sales for March. New home sales rose to an annualized rate of 1.43 million, up from 1.23 million in February. Wall Street was expecting sales to fall to 1.19 million.

The housing news helped overcome a disappointing reading on consumer confidence, which Wall Street feared would result in lower consumer spending. The Conference Board’s consumer confidence index fell to 97.7 in April from 103 in March, slightly lower than the 98 economists expected.

Declining issues outnumbered advancers by nearly 5 to 2 on the New York Stock Exchange, where preliminary consolidated volume came to 1.96 billion shares, compared with 1.8 billion shares at the same point on Monday.

The Russell 2000 index of smaller companies was down 8.78, or 1.5 percent, at 587.66.

Overseas, Japan’s Nikkei stock average fell 0.34 percent. In Europe, Britain’s FTSE 100 closed down 0.4 percent, France’s CAC-40 was flat for the session, and Germany’s DAX index lost 0.31 percent.