- 04Jan
(Reuters) - Stock indexes were little changed on Tuesday as optimism over the economic outlook was offset by a decline in consumer stocks.
Tuesday's small move follows a jump in stock indexes Monday as manufacturing data around the world prompted investors to inject new money into equities."You are continuing to see positive news as far as the economy goes, which has continued to fuel this rally as we enter the new year," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
"Most of the year-end prognostications for the market for 20011 were calling for a fairly strong year, so I think that may be getting the retail investor a little bit more interested," he said.
The Dow Jones industrial average .DJI dropped 0.68 points, or 0.01 percent, to 11,670.07. The Standard & Poor's 500 .SPX dropped 1.55 points, or 0.12 percent, to 1,270.32. The Nasdaq Composite .IXIC gained 1.56 points, or 0.06 percent, to 2,693.08.
Monday's rally that had the Dow and S&P reaching new two-year highs 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 volume increase may indicate the gains could extend into Tuesday.
But Morgan Stanley dampened optimism as it forecast a base case year-end target for the S&P 500 at 1,238, below the close for 2010. The firm's risk-reward scenario for 2011 was "skewed to the negative."
Weighing on consumer stocks, Supervalu Inc (SVU.N) fell 7.2 percent to $8.92 after Morgan Stanley cut its rating, while Borders Group Inc (BGP.N) dropped 8.7 percent to 88 cents, a day after two top executives at the bookstore chain resigned.
The S&P consumer staples index .GSPS fell 0.5 percent.
Defense sector stocks are also on the spotlight, with U.S. Defense Secretary Robert Gates expected to detail about $100 billion in Pentagon savings and cuts to weapons programs as early as Thursday. The PHLX defense index .DFX dipped 0.3 percent after hitting a seven-month high on Monday.
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.
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