Stocks fall as investors wary of consumer data, Fed decision

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Wall Street pulled back Tuesday after a disappointing reading on consumer spending suggested that inflation is taking a toll on the U.S. economy.

The Conference Board said its April reading on consumer confidence fell for the fourth straight month because of heightened concerns about soaring inflation and the weakening job market.

Wall Street remains worried that inflation could accelerate and curtail consumer spending, which accounts for more than two-thirds of the U.S. economy. That's also of paramount concern for the Federal Reserve, which begins a two-day policy meeting Tuesday afternoon.

The Fed is expected to cut interest rates by a quarter point on Wednesday, but then hold firm for the remainder of the year. The Fed is facing a difficult juggling act of trying to shore up the faltering economy without triggering inflation.

In midmorning trading, the Dow Jones industrial average fell 64.08, or 0.50 percent, to 12,807.67.

Broader markets also fell. The Standard & Poor's 500 index dropped 9.23, or 0.66 percent, to 1,387.14; and the Nasdaq composite index fell 10.52, or 0.43 percent, to 2,413.88.

Bond prices rose as investors remained hesitant about equities. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.79 percent from 3.82 percent late Monday.

Oil prices fell amid expectations that a supply disruption in Britain would soon be resolved and as the U.S. dollar strengthened further against the euro. Light, sweet crude for June delivery fell $1.78 to $116.97 a barrel on the New York Mercantile Exchange.

In corporate news, MasterCard Inc. spiked $21.47, or 8.8 percent, to $264.37 after the company reported profit more than doubled in the first quarter. The company said more customers overseas used their credit and debit cards for purchases, though spending within the U.S. rose at a moderate pace.

However, rival Visa Inc. fell 59 cents to $75.16 after it reported late Monday that first-quarter profit rose 28 percent. Investors are concerned that the world's biggest credit card processor will have a difficult time managing choppy U.S. economic conditions.

There was also further anxiety about the global credit crisis' impact on financial institutions. Deutsche Bank AG said Tuesday it wrote down $4.2 billion in leveraged loans, commercial real estate and mortgage-backed securities, during the first quarter, pushing Germany's biggest bank to its first quarterly loss since 2003 amid trading losses, lower revenue and global market jitters.

The Russell 2000 index of smaller companies fell 6.49, or 0.89 percent, to 718.88.

Declining issues surpassed advancers by 4 to 3 on the New York Stock Exchange, where volume came to 171.2 million.

Overseas, Japan's Nikkei stock average rose 0.22 percent. In morning trading, Britain's FTSE 100 fell 0.7 percent, Germany's DAX index fell 0.47 percent, and France's CAC-40 shed 0.58 percent.