US Stocks Slip As Euro-Zone Woes Continue To Weigh; DJIA Off 16

By Donna Kardos Yesalavich and Kristina Peterson

Of DOW JONES NEWSWIRES

NEW YORK -- U.S. stocks fell Tuesday as investors continued to worry about the European sovereign-debt crisis, but better-than-expected data on U.S. manufacturing and consumer confidence helped limit the drop.

The Dow Jones Industrial Average declined 16 points, or 0.2%, to 11036. Bank of America was the measure's worst performer, off 2%, while Procter & Gamble shed 1.5% and Cisco Systems dropped 1.2%.

Keeping the declines in check, Caterpillar climbed 1.2%, boosted by a better-than-expected reading on Chicago-area manufacturing. Wal-Mart Stores also rose, up 0.6%, and Walt Disney added 0.6%, after the Conference Board's measure of consumer confidence topped estimates.

The blue-chip measure is on pace to end November in negative territory, down 0.9% on the month recently. That would mark its first down month since August.

The Nasdaq Composite Index shed 0.9% to 2502, hurt by a 4.4% drop in Google following reports that the online-search giant is offering to buy Groupon, a social-network site geared toward discount shoppers, in a deal worth $6 billion. Separately, the European Commission opened an antitrust investigation into allegations that Google has abused a dominant position in online search.

The Standard & Poor's 500-stock index slipped 0.4% to 1183, with its technology sector leading to the downside while the materials and consumer-discretionary stocks rose. The S&P 500's month-to-date return wavered between positive and negative territory, putting the measure at risk of breaking a three-month winning streak.

Investors were encouraged by the Chicago Purchasing Managers' Index, which came in at 62.5 in November, better than the 60.0 reading economists were expecting. In addition, the Conference Board's November reading of consumer confidence came in at 54.1, better than the mean economists' forecast of 52.5.

"The indication here is you are seeing a recovery, but it is a sluggish one and it's really going to take a rally in employment in order for it to become more aggressive," said Edmund Hyland, managing director and a global investment specialist at J.P. Morgan Private Bank's southeastern region.

Meanwhile, investors continue to fret that Europe's sovereign-debt crisis could widen to Portugal, Spain or Italy. The premium demanded by investors to hold 10-year Spanish bonds over German bunds hit more than three full percentage points, the largest gap since the launch of the euro.

"The theme that really strikes me is this tug of war in the information we're receiving," said Stephen Wood, chief market strategist at Russell Investments. He noted that while the euro-zone debt crisis has produced "very headline-worthy negative news, [it] has kind of masked some untrivial improvement in some U.S. economic data."

Wood added that the euro-zone issues are "something the market is pricing in now and it is just going to have to get accustomed to dealing with some of these rolling solvency issues in Europe."

Global risk appetite was also undermined by talk of higher Chinese interest rates as well as disappointing Japanese jobless figures, encouraging investors back into safe havens, such as the dollar and Treasurys.

The U.S. Dollar Index, which tracks the currency against a basket of six others, rose 0.5%. The euro dipped below $1.30 to a two-month low earlier in the session, but was recently trading at $1.3009, down from $1.3123 late Monday in New York. Increased demand for Treasurys sent the yield on the 10-year note down to 2.80%.

Crude-oil prices slipped below $85 a barrel while gold futures were also lower.

Among stocks in focus, Seagate Technology dropped 3.1% after the maker of computer disk drives cut off talks with private-equity firms about taking it private because potential suitors didn't value the company highly enough.

Barnes & Noble fell 3.3%. The book retailer's fiscal second quarter loss narrowed, but it gave a muted outlook, projecting a wider-than-anticipated loss for the year and third-quarter earnings below analysts' expectations.

---By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; donna.yesalavich@dowjones.com