Mixed day on Wall Street
Stocks end mixed amid concerns about interest rates and softening consumer confidence. Tech stocks see modest gains.
NEW YORK (CNNMoney.com) -- Stocks ended mixed Tuesday for the second day in a row, after declining most of the session, following a troubling report on consumer confidence and some trepidation about what the Federal Reserve will decide at the conclusion of its two-day meeting that began this morning.
The Dow Jones industrial average (INDU) fell 0.3% and the broader Standard & Poor's 500 (SPX) lost nearly 0.4%, shortly after the closing bell. But the tech-heavy Nasdaq composite (COMP) was up about 1.7 points.
Commodity prices fell sharply, and the dollar rose in anticipation of another interest rate cut. A change in rate policy could alter the dynamic between the U.S. currency and commodity futures, particularly crude oil, which has been driven to record highs partly because of the weak dollar. (Full Story)
Bond prices edged lower late in the session to close flat, as stocks regained momentum. Technology stocks led gainers at the end of the day, with Yahoo (YHOO, Fortune 500), Research in Motion (RIMM) and Google (GOOG, Fortune 500) advancing.
Dow component Merck (MRK, Fortune 500) weighed on the blue-chip average after discouraging words from the FDA drove that company's stock down sharply.
Stocks also had to contend with a report on consumer confidence that came in better than expected but was still at a five-year low.
Wednesday could be a volatile day on Wall Street with the Federal Reserve's decision on interest rates due out at 2:15 p.m. EST. But the market will first have to digest an 8:30 a.m. report on the gross domestic product - the broadest measure of the economy's health - and a 10:30 a.m. report on crude inventories.
Eyes on the Fed: The central bank is expected to cut rates by a quarter of a percentage point when it releases its policy statement Wednesday. Investors will scrutinize the tone of the Fed's statement to determine whether or not additional rate cuts could be in the cards.
"It's pretty much baked-in that the Fed is going to signal that rate cuts are over," said Peter Cardillo, chief market economist at Avalon Partners. But a surprise from the Fed could give the market a new catalyst, he added.
"If they don't cut rates, that would be a positive surprise," he said. In this case, the market would infer that the central bank sees the economy strengthening, which could cause stocks to rally.
On the other hand, "if they cut 50 basis points and don't signal an end, that would be a negative surprise," he said. Translation: It would imply that the economy is still in need of support, and stocks would sell off.
Economic news: The New York-based Conference Board said its consumer confidence index dropped to 62.3 in April from 65.9 in March, reaching the lowest level since March 2003. But the decline was not as steep as economists had expected.
On the housing front, the S&P Case/Shiller Home Price Index showed that home prices posted record declines in February. And foreclosure filings in the first three months of 2008 more than doubled from last year, according to industry group RealtyTrac.
Separately, President Bush said in a speech at the White House Tuesday afternoon that Congress should pass legislation to help reduce energy and food costs, keep people in their homes, and make student loans more accessible.
Company news: Drugmaker Merck (MRK, Fortune 500) said late Monday that the Food and Drug Administration is requesting more information regarding its cholesterol drug candidate Cordaptive. Merck shares fell more than 10%.
Credit card processor Visa (V) reported a jump in quarterly profit late Monday. Shares rose about 4.5%.
Troubled home lender Countrywide (CFC, Fortune 500), which is in the process of being bought by Bank of America (BAC, Fortune 500), reported a loss of nearly $900 million during the first quarter on higher housing-related credit losses.
Deutsche Bank AG (DB), Germany's largest bank, announced a $4.2 billion writedown for the first quarter. The bank's CEO said financial market conditions during the quarter were "the most difficult in recent memory."
On the upside, the world's largest maker of liquid crystal display glass, Corning (GLW, Fortune 500), reported that first-quarter profit more than tripled versus last year on strong demand for flat-screen TVs and computers. Shares rose nearly 3%.
Video-game maker Take-Two Interactive (TTWO) on Tuesday released the latest installment of its Grand Theft Auto video-game series. "Grand Theft Auto 4" is expected to break sales records and could give Take-Two more room to negotiate a higher offer price from rival Electronic Arts (ERTS), which has launched a hostile takeover bid.
On Monday, Mars Inc. announced it will purchase confectionary giant Wrigley in an all-cash deal valued at approximately $23 billion. The offer has financial backing from Warren Buffett's Berkshire Hathaway (BRK.B).
Market breadth was negative. On the New York Stock Exchange, winners topped losers by about 3 to 2 as roughly 9.93 million shares changed hands. On the Nasdaq, advancers topped decliners by 4 to 3 on volume of 1.51 billion shares.
Commodities: U.S. light crude oil for June delivery fell $3.12 to settle at $115.63 a barrel on the New York Mercantile Exchange, after a Scottish refinery resumed operation following a labor dispute. On Monday, oil hit a record $119.93 a barrel in electronic trading.
Meanwhile, the national average price for a gallon of regular unleaded gas hit an all-time record of $3.607, AAA reported. (Full story)
COMEX gold for June delivery fell $18.70 to settle at a four-month low of $876.70 an ounce.
Other markets: The dollar rose versus the euro and fell versus the yen.
Treasury prices were flat, with the yield on the benchmark 10-year note at 3.82%, unchanged from 3.82% late Monday. Bond prices and yields move in opposite directions. 
