(Updates to close)
* Consumer confidence sinks to 16-year low in June
* UPS cuts profit outlook, following example of FedEx
* Higher oil prices add to jittery tone
* Fed meeting on rates policy, eyes on statement
By Kristina Cooke
NEW YORK, June 24 (Reuters) - U.S. stocks fell on Tuesday,
on concerns about the economy after a report showed consumer
confidence hit a 16-year low and as a profit warning from
United Parcel Service <UPS.N> stoked fears about corporate
results.
But trading volume was thin, with investors hesitant to
place any big bets as they wait to see whether or not the
Federal Reserve keeps interest rates on hold as expected
Wednesday.
Inflation worries also loomed as the price of oil rose and
the Fed began a meeting whose policy statement could
underscore the central bank's growing unease about price
pressures.
Shares of big manufacturers, seen as economic bellwethers,
fell, with Caterpillar Inc <CAT.N> down 4 percent. UPS shares
were a top drag on the S&P 500, sliding 6 percent.
Besides grappling with a slowing economy, companies also
face pressure from soaring fuel costs, which prompted Dow
Chemical Co <DOW.N>, the biggest U.S. chemicals manufacturer,
to announce price increases of as much as 25 percent on its
products.
"I think the market is starting to price in a higher
likelihood of a recession and the UPS forecast certainly
points to a much slower economy," said Paul Nolte, director of
investments at Hinsdale Associates, in Hinsdale, Illinois.
The Dow Jones industrial average <> fell 34.93 points,
or 0.29 percent, to close at 11,807.43. The Standard & Poor's
500 Index <.SPX> was down 3.71 points, or 0.28 percent, at
1,314.29, while the Nasdaq Composite Index <> slid 17.46
points, or 0.73 percent, to end at 2,368.28.
UPS shares fell to $62.26, a five-year low, after the
package delivery company cut its second-quarter earnings
outlook late on Monday, citing slow economic growth and high
fuel costs. For details, see []
The U.S. corporate profit outlook is deteriorating
rapidly, Thomson Reuters Proprietary Research showed on
Tuesday, with S&P 500 earnings for the second quarter now seen
falling at a double-digit pace from a year earlier.
Shares of Caterpillar, the maker of bulldozers and
excavators, fell to $76.64 on the New York Stock Exchange,
while plane maker Boeing's shares dropped 1.1 percent to
$74.79.
Dow Chemical shares fell 2.8 percent to $36.58.
A gain in financial shares helped keep losses in check.
The S&P financial index <.GSPF> , which is down nearly 12
percent this month, climbed 1.5 percent, led by Wells Fargo
<WFC.N> and JPMorgan Chase & Co <JPM.N>. The biggest
percentage gains were among regional banks, such as SunTrust
<STI.N>, as investors looked for bargains in the beaten-down
sector.
JPMorgan shares rose 2.3 percent to $37.72, while Wells
Fargo gained 3.9 percent to $25.20. SunTrust shares jumped 4.1
percent to $37.40.
Yahoo <YHOO.O> shares were active, rising as much as 11
percent before giving up most of those gains to end up 2.8
percent at $22.04 on the Nasdaq. Technology blog TechCrunch
said Yahoo's talks with Microsoft Corp <MSFT.O> were back on,
citing unnamed sources. But CNBC, also citing unnamed sources,
said there was no deal "whatsoever" on the table.
Apart from the decline in consumer confidence, investors
also got an update on housing. According to the Standard &
Poor's/Case Shiller home price index, U.S. home prices
extended their record slide in April, but the pace of decline
ebbed in the month.
The Dow Jones U.S. home construction index <.DJUSHB> rose
3.9 percent.
Trading was light on the New York Stock Exchange, with
about 1.34 billion shares changing hands, below last year's
estimated daily average of roughly 1.90 billion, while on
Nasdaq, about 2.19 billion shares traded, just above last
year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones by a ratio of
about 2 to 1 on the NYSE and about 3 to 1 on Nasdaq.
(Editing by Jan Paschal)
