MarketView for December 29

Summary 

Stock prices were slightly lower in a low-volume trading day on Tuesday, breaking a six-day string of gains. The moribund market was due in part to an increase in consumer confidence being offset by an unchanged S&P/Case-Shiller composite index of home prices. The Street had been expecting home prices to increase. The Conference Board's index of consumer confidence showed a reading of 52.9, a three-month high. However, it is a short trading week with the markets closed on Friday and the Street is almost barren of traders and investors.

The red ink for the major equity indexes came on the heels of six days of gains. Nonetheless, the S&P 500 index is still up 25 percent for the year, while trading volume was the lowest for the year, with only 638 million shares changing hands on the Big Board, as compared with last year's estimated daily average of 1.49 billion shares.

On the plus side, shares of Procter & Gamble closed up 0.5 percent at $61.58. Weighing on the Nasdaq was Apple, which slid 1.2 percent to $209.10 after hitting recent highs. The stock was pressured as Nokia said it has filed a complaint against Apple with the International Trade Commission in a patent dispute.

In corporate news, United Community Banks Inc fell 5 percent to $3.24 after the company temporarily suspended its stock dividend in a move to improve liquidity.

Economic Data Does Little for the Markets

Consumer confidence hit a three-month high in December, while prices in the hard-hit housing sector stalled in October, breaking a five-month string of gains. The consumer confidence reading released on Tuesday reinforced views that the economy is gradually recovering, and the October housing data from the widely watched Standard & Poor's/Case-Shiller indexes was seen as indicating the market is stabilizing.

The Conference Board said its index of consumer attitudes rose to a reading of 52.9 in December from a revised 50.6 in November as job market pessimism eased and consumers' expectations reached a two-year high.

Despite some signs of optimism, consumers in December rated their present situation the worst since February 1983, according to the Conference Board. The consumer confidence index beat the consensus expectation of 52.5. Last month's reading was also revised higher from an originally reported 49.5.

The expectations index rose to 75.6 -- the highest since December 2007 -- from 70.3 in November. Consumers' labor market assessment also showed some signs of improvement, with the "jobs hard to get" index decreasing to 48.6 from 49.2. Consumers rated their present situation the worst since February 1983, with that index falling to 18.8 from 21.2.

The "jobs plentiful" index also fell, dropping to 2.9 -- also its lowest since February 1983 -- from 3.1.

In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for. September's index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent. Only seven of the 20 cities in the composite index had month-over-month gains in prices in October, S&P said.

A sustained upturn in home prices is seen vital in the fledgling rebound in the hardest hit housing market since the Great Depression. There has been growing concern that record-high levels of foreclosures will mount even further and depress prices anew.

S&P said the annual rate of price declines improved, with the 20-city index dropping 7.3 percent from a downwardly revised 9.3 percent in September. All 20 metropolitan areas and both the 20-city and 10-city indexes showed smaller rates of decline in October compared with September.