NEW YORK (MarketWatch) — U.S. stocks fell Tuesday, trimming a second month of gains, as investors worried central banks would not come through with enough stimulus to bolster the global economy.
“There’s a lot more coming down the pipe here: the Federal Reserve policy meeting, then the European Central Bank, and job numbers at the end of the week,” said Scott Brown, chief economist at Raymond James & Associates.
The U.S. Federal Reserve and European Central Bank face critical tests this week amid heightened expectations that they are moving toward new actions to tackle fragility in the global economy.
On Wednesday, the Federal Reserve finishes a two-day policy session, with many skeptical of how much impact the central bank can have.
“The forecasts are 50-50 as to whether they’ll announce another easing program of some sort. But they can’t fix the fiscal situation and what is going on in Europe,” said Brad Sorensen, director of market and sector research at Charles Schwab.
The Dow Jones Industrial AverageDJIA-0.49% fell 64.33 points, or 0.5%, to 13,008.68, up 1% month-to-date. The index posted its ninth monthly gain in 10.
The S&P 500 index SPX-0.43% lost 5.98 points, or 0.5%, to 1,379.32, giving it a 1.3% rise from the end of June.
The Nasdaq Composite COMP-0.21% shed 6.32 points, or 0.2%, to 2,939.52, leaving it with a 0.2% gain for July.
For every stock advancing roughly three fell on the New York Stock Exchange, where composite volume neared 3.8 billion. Composite volume for Nasdaq-listed shares came close to 1.8 billion.
Two options for euro zone
The euro region has two options: become more fiscally unified or break apart, said Sorensen at Charles Schwab.
European central banks and some leaders have reiterated that the 17-nation union is staying together, “but already we’re seeing comments out of Germany indicating we’re not willing to go down that path without serious concessions from other countries. When it actually comes down to it, one country does not want to bail out another,” said Sorensen.
“The Germans want the big bazooka kept on the sidelines,” Peter Boockvar, equity strategist at Miller Tabak, wrote in an email.
Bloomberg News reported the German Finance Ministry said it did not see any need to give the European Stability Mechanism a bank license.
And CNBC quoted an unidentified official from the German Bundesbank that monetary policy should focus on price stability, while fiscal troubles among member states should be addressed by fiscal tools such as the rescue fund, or European Financial Stability Facility.
U.S. consumer confidence in July climbed for the first rise in six months as Americans grew more hopeful about employment prospects in six months, the Conference Board said. Read more about consumer confidence index.
“Consumer confidence continues to muddle along; lower energy prices have helped a little bit. Also the housing market: there’s a rebound there, although not substantial,” said Sorensen.
Tuesday’s U.S. economic reports also included data from the Commerce Department showing consumer purchases slowed in June, while wages rose. Read more on consumer spending.
“It’s not like spending is falling off a cliff, but indicates consumers are still pretty cautious,” said Schwab’s Sorensen.