Investors held off making big moves Tuesday as North Korea’s nuclear testing kept Wall Street on edge.
Stocks fluctuated in a tight range Tuesday after North Korea reportedly defied the United Nations by firing two short-range missiles after detonating a nuclear bomb underground on Monday. The U.N. Security Council condemned that test as a violation of international law.
Investors were already nervous about the sustainability of the stock market’s massive two-month rally, given the uncertainty surrounding the global economy. The political tension between North Korea and the other countries, including the United States, South Korea and China, gave investors around the world another reason to trade with caution.
In economic news Tuesday, S&P/Case Shiller reported a 18.7 percent drop in its March home price index. That decrease was a bit larger than in February, and slightly bigger than economists predicted.
After mixed economic data over the last couple weeks, as well as a huge number of stock offerings by banks, the market is likely to stay volatile in the coming weeks, said Steven Goldman, chief market strategist at Weeden & Co.
“The market’s had a pretty huge gain here,” he said. “It’s probably vulnerable to a consolidation lasting a month or two.”
But, Goldman added, it should be a “one step down, two steps forward” pattern, as long as the economy shows signs of recovery later in the year.
In the first half-hour of trading, the Dow Jones industrial average fell 11.23, or 0.1 percent, to 8,266.09. The Standard & Poor’s 500 index fell 2.87, or 0.3 percent, to 884.13, and the Nasdaq composite index rose 1.56, or 0.1 percent, to 1,693.57.
The market is awaiting a report on consumer confidence at 10 a.m. Eastern time. Economists predict that the Conference Board’s consumer confidence index rose in May.
Last week, the major market indexes ended modestly higher, but only after seesawing on worries about the economy and banks. The Dow is still up 26.4 percent from its 12-year low hit on March 9.
This week, the market is not only hoping for signs of global stability, but also watching General Motors Corp. as the automaker’s June 1 restructuring deadline approaches. GM is expected to close more plants and force more employee concessions as it tries to avoid bankruptcy court. On Friday, GM borrowed another $4 billion from the U.S. government, after already received $15.4 billion.
Government bonds rose in early trading Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.41 percent from 3.46 percent late Friday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $1.61 to $60.06 per barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average fell 0.4 percent. In afternoon trading, Britain’s FTSE 100 fell 1 percent, Germany’s DAX index fell 2 percent, and France’s CAC-40 fell 1.3 percent.
