Stocks pull back on Europe's deepening debt woes

NEW YORK -U.S. stocks are following European markets lower after Portugal's debt was downgraded, deepening fears that Europe's debt problems are spreading.

Standard & Poor's slashed Portugal's credit rating Tuesday, sending stocks sharply lower across Europe. S&P; also downgraded Greece's debt.

Investors have been on edge about Greece's fiscal crisis, and have worried that Portugal could be the next weak European economy to require help. That has undermined confidence in Europe's shared currency, the euro.

The Dow Jones industrial average is down 145.86, or 1.3 percent, at 11,059.17. The Standard & Poor's 500 index is down 19.79, or 1.6 percent, at 1,192.26, while the Nasdaq composite index is down 35.91, or 1.4 percent, at 2,487.04.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) — Stocks were narrowly mixed late Tuesday morning after growing consumer confidence and the latest round of upbeat earnings reports mostly offset fresh concerns about Greece's debt problems.

Investors received strong earnings results from industrial giants DuPont, 3M and Ford, as well a better-than-expected reading of the Conference Board's consumer confidence index. However, Greece is still facing questions about its ability to tap a bailout package and China is again expected to try and slow down its hot economy.

Dow components 3M Co. and Dupont Co. both reported better-than-expected first-quarter profits. The pair also boosted their earnings outlooks for the year based on improving sales and a rebounding economy.

The Conference Board's consumer confidence index jumped to 57.9 in April. Economists polled by Thomson Reuters had forecast it would rise to 53.5.

Tommy Williams, president of Williams Financial Advisors in Shreveport, La. said consumers are starting to feel wealthy again, especially as the stock market has risen sharply in recent months. Consumers also appear to have money to go out and spend, which should further help a recovery.

"The cash is there to be invested or spent," Williams said.

In late morning trading, the Dow Jones industrial average fell 9.22, or 0.1 percent, to 11,195.81. The Standard & Poor's 500 index fell 2.10, or 0.2 percent, to 1,209.95 while the Nasdaq composite index dropped 1.27, or 0.1 percent, to 2,521.68.

3M shares jumped $1.84, or 2.1 percent, to $89.28. DuPont shares fell 37 cents to $40.58 even though the chemical maker reported upbeat earnings.

About four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 366.1 million shares, compared with 307 million shares traded at the same time on Monday.

Major indexes might be entering a period with little movement in the coming days as investors wait for news out of Washington. The Federal Reserve begins a two-day, rate-setting meeting Tuesday. The Fed has said it plans to keep rates at historic lows for an extended time to help the recovery. However, eventually rates will need to climb to fight inflation as the economic rebound continues. Investors are hoping the Fed will hold off on raising rates for some time.

Williams noted that any change in the language of the Fed's statement Wednesday about when it might raise rates could spark a 5 percent to 10 percent pullback in stocks.

Stocks have been on a nearly unbroken climb over the past two months. The Dow has risen in six straight and 12 of the past 13 trading days.

Investors are also uneasy about debate in Congress on an overhaul of financial regulations. However, it's unclear when a Senate floor debate on the legislation will begin.

Meanwhile Goldman Sachs CEO Lloyd Blankfein and other top executives from the bank will be testifying on Capitol Hill Tuesday about the company's dealings in mortgage-backed securities during the credit crisis. The Securities and Exchange Commission has charged Goldman with civil fraud, accusing it of misleading investors about investments tied to subprime mortgages.

Goldman shares rose $2.85 to $154.88.

Stocks fell early in the day after European shares tumbled on new concerns about Greece's ability to tap a bailout package to help relieve its debt troubles. Greece has to make a new round of payments on debt on May 19 and there are now questions about whether the country will get access to bailout money before then.

The dollar rose against the euro as investors worry that debt problems in Greece and some of the 15 other countries that use the currency will upend an economic rebound on the continent.

Most Asian markets fell on concerns that Chinese regulators will try to slow the country's supercharged economic growth. The government has been trying to slow the country's real estate market in hopes of avoiding a speculative bubble.

Britain's FTSE 100 fell 1.1 percent, Germany's DAX index dropped 0.7 percent, and France's CAC-40 tumbled 1.3 percent. Hong Kong's Hang Seng fell 1.5 percent, while Japan's Nikkei stock average rose 0.4 percent.

A new report on housing showed more troubles in that market. The Standard & Poor's/Case-Shiller 20-city home price index showed its first annual growth rate in three years, but 11 of the 20 cities used in the index still showed a drop in prices.

The growth of 0.6 percent was also less than the 1.2 percent jump economists polled by Thomson Reuters forecast.

Bond prices rose as investors sought some safety following the latest overseas concerns. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 3.76 percent from 3.81 percent late Monday.

The dollar rose as did gold. Oil dipped slightly.

The Russell 2000 index of smaller companies fell 1.64, or 0.2 percent, to 740.50.