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Stocks open higher, then lose ground; market appears headed for best January since 1997
NEW YORK (AP) ' The stock market lost ground Tuesday but still appeared headed for its best January finish in more than a decade. An unexpected drop in consumer confidence dragged stocks down after a strong open.
The Dow Jones industrial average was down 37 points at 12,617 just after 1 p.m. EST. The Standard & Poor's 500 was down a point at 1,311. The Nasdaq composite index was down a point at 2,811.
For the month, the S&P 500 is up 4.3 percent. That would be its best performance to start a year since a 6.1 percent gain in January 1997. Last year, the market added 2.3 percent in the first month.
Investors had such low expectations for the economy after a tough 2011 that it was easy for reports in January to come in better than expected, said Jerry Harris, chief investment strategist at the brokerage Sterne Agee.
"I don't see anything really glamorous or tremendous about the economy or earnings," Harris said. "But I think they're very acceptable, and things are grinding along."
The Dow closed at 12,217.56 at the end of last year, then started this year with a pop ' a gain of 179.82 points on opening day. It was the kind of big swing investors became accustomed to in 2011.
Since then, it's been a quiet ascent: 19 days in a row, counting Tuesday, of moves of less than 100 points. The last time the Dow had such a placid stretch was a 34-day run that started Dec. 3, 2010.
The Dow started the day up 66 points after encouraging signs from Europe that Greece might finally complete a deal to cut its crushing debt, a step toward securing a critical '130 billion bailout payment.
Greece is negotiating with investors who bought its government bonds. They are expected to swap their bonds for new ones with half the face value, plus a lower interest rate and longer term of maturity.
Investors are increasingly worried that Portugal may need a similar deal with its private creditors. European leaders insist the Greek reduction is a one-time event. Portugal's borrowing costs have risen to record highs.
Back home in the United States, investors have enjoyed a steady climb through January amid signs of an improving economy. Unemployment has fallen from a 10 percent peak in October 2009 to 8.5 percent.
The Dow lost its gains after the Conference Board reported that its consumer confidence index fell to 61.1 in January, down from 64.8 in December. Economists had expected 68.
There were also signs that the housing market continues to struggle. Home prices fell in November for a third straight month in in 19 of the 20 cities tracked by the S&P/Case-Shiller index. The biggest declines were in Atlanta, Chicago and Detroit.
Eight of the 10 major categories in the S&P 500 were lower for the day. Telecommunications stocks and financial stocks managed small gains.
Avery Dennison Corp., which makes labels and packaging materials, was among the worst performers in the S&P, down 5 percent, after it said earnings plunged 81 percent on nearly flat sales. Its 2012 outlook was well below Wall Street expectations.
Among other stocks in the news:
' RadioShack Corp. stock plummeted 28 percent. The company said it earned 11 cents to 13 cents per share for the quarter that ended in December. That's down from 51 cents a year earlier and less than half what Wall Street was expecting.
' Mattel Inc. soared 6 percent because of strong demand for Barbie and Monster High dolls during the holidays. That boosted Mattel's fourth-quarter profit by a better-than-expected 14 percent. The company also raised its dividend.
' U.S. Steel Corp. gained 4 percent after it reported strong demand for pipes from the oil industry from October through December. The company was also optimistic about this quarter.
' Agriculture conglomerate Archer Daniels Midland declined 4 percent after it reported an 89 percent drop in quarterly net income. The company said its results were weighed down by weakness in oilseeds, corn processing and agricultural services.
AP Business Writer Stan Choe contributed to this report.