Stocks fell modestly in morning trading Tuesday as investors sort through another round of mixed economic data and retail earnings.
Overseas markets retreated slightly after big gains the previous day.
Investors are examining earnings reports from retailers, looking for signs of strength in consumers. A report showing a rebound in retail sales helped push major indexes higher on Monday.
Consumer spending accounts for about 70 percent of all economic activity in the nation, and a rebound in spending — especially during the holiday season — is necessary for a strong economic recovery.
Home Depot Inc., Saks Inc. and Target Corp. all reported better-than-expected third-quarter results Tuesday morning, but say they remain cautious of a potential rebound and ahead of the key upcoming holiday season.
Fed chairman Ben Bernanke reiterated Monday that an economic recovery is likely to be only moderate. He also said the pace of the recovery will keep unemployment from declining quickly. Consumers' anxiety about their job security has been the primary factor behind their modest spending.
Traders received a disappointing report on industrial production. The Fed said production at the nation's factories, mines and utilities rose 0.1 percent, less than the 0.4 percent predicted by economists polled by Thomson Reuters.
In morning trading, Dow Jones industrial average fell 15.04, or 0.1 percent, to 10,391.92. The Standard & Poor's 500 index declined 2.79, or 0.3 percent, to 1,106.51, while the Nasdaq composite index fell 6.30, or 0.3 percent, to 2,191.55.
The Labor Department's Produce Price Index, which measures inflation at the wholesale level, rose 0.3 percent in October, after falling by 0.6 percent a month earlier. Economists had predicted a 0.5 percent rise.
Excluding volatile food and energy costs, the core index dropped by 0.6 percent in October.
The report provides further evidence that inflation will remain stable — a forecast repeated by Bernanke on Monday — as rising unemployment, wary shoppers and tight credit keep a lid on prices.
A bigger-than-expected rebound in retail sales in October helped push stocks sharply higher Monday, sending major indexes to their 13-month highs. The Dow jumped 136 points and the S&P closed above the 1,100 level for the first time in more than a year.
Retail sales rose 1.4 percent in October, nearly double the 0.8 percent increase forecast by economists and a sharp rebound from the 2.3 percent decline in September.
A weakening dollar on Monday also sent the price of commodities and materials and energy companies' stock higher. Stocks have frequently been moving in the opposite direction of the dollar during the latest part of the market's rally.
On Tuesday, the dollar rose against other major currencies, while the price of gold declined after setting a record high a day earlier.
