Stocks fell on Tuesday after solid earnings from Home Depot Inc, the world's No. 1 home improvement retailer, failed to squash investor worries over the nation's flagging economy.
Better-than-expected July retail sales kept up hopes the main engine of US economic growth - consumer spending - is still holding up. But Wal-Mart Stores Inc, the world's largest retailer, reported a scant 2 per cent rise in profits and warned third-quarter profits will land at the low end of Wall Street forecasts, stung in part by higher costs.
The market has been trapped in a tight trading range in the past month as skittish investors hold their breath for clear signs of an economic uptick. The US Federal Reserve has ratcheted down interest rates six times this year to pump up the world's largest economy and is widely expected to cut again next week.
"We are in period of transition and when you are in a period of transition you are not going to get a continuous direction," said Mr John Davidson, chief investment officer at Circle Trust Co, which has $8 billion under management.
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