* Consumer sentiment fall dents investor optimism
* Home Depot shares up as it swings to quarterly profit
* Indexes down: Dow 1 pct, S&P 1.2 pct, Nasdaq 1.3 pct
* For up-to-the-minute market news, click []
(Updates to close)
By Leah Schnurr
NEW YORK, Feb 23 (Reuters) - U.S. stocks suffered their
biggest one-day decline in nearly three weeks on Tuesday after
a sharp drop in consumer confidence heightened worries over one
of the most vulnerable areas of the economy.
Consumer confidence in February slumped to a 10-month low
as the short-term outlook on jobs worsened. For details, see
[]. Results from retailers added little hope, as
bellwethers like Target Corp <TGT.N> forecast a tepid
performance in the first quarter.
"There's a bit of an adjustment process in terms of the
growth outlook as to what is going to be the major driver,"
said Nick Kalivas, vice president of financial research &
senior equity index analyst at MF Global in Chicago.
If "the economic outlook gets adjusted down, certainly the
materials and semis would be the places to see selling," he
said.
Stocks associated with a strong cyclical upturn in the
economy were hit. Top performers during last year's rally,
including technology, materials and energy stocks led the
downside. Oil futures <CLc1> fell $1.45 to $78.86 a barrel,
pulling the S&P energy index <.GSPE> down by 1.5 percent. Dow
component Caterpillar Inc <CAT.N> shed 2.4 percent to $56.66.
Chipmaker Intel Corp <INTC.O> dropped 2.4 percent to $20.38
and the PHLX semiconductor index <.SOXX> lost 2.8 percent.
The weak data added to the cautious tone before
congressional testimony from Federal Reserve Chairman Ben
Bernanke on interest rate policy beginning on Wednesday.
Meanwhile, a separate report showed home prices
unexpectedly slipped in December, adding to concerns over the
sustainability of the economic recovery.
The Dow Jones industrial average <> slipped 100.97
points, or 0.97 percent, to 10,282.41. The Standard & Poor's
500 Index <.SPX> gave up 13.41 points, or 1.21 percent, at
1,094.60. The Nasdaq Composite Index <> was off 28.59
points, or 1.28 percent, to 2,213.44.
Overseas data set a negative tone early on with German
business confidence falling unexpectedly for the first time in
almost a year. The day's losses reversed stocks' recent trend
and the S&P 500 racked up its worst decline since early
February.
The broad index had risen in four of the past five trading
days and posted weekly gains in the last two weeks.
Investors shied away from risk ahead of Bernanke's
testimony when he is likely to be asked about the Fed's
surprise move to raise the discount rate last week.
Home Depot Inc <HD.N> was a bright spot, reporting results
that beat estimates and raising its profit forecast. The Dow
component gained 1.4 percent to $30.75. []
Jason Weisberg, trader at Seaport Securities in New York,
said the strong earnings season has been overshadowed by
uncertainty about the political direction.
"The really nice thing is the guidance you're hearing from
corporations, it looks very good," said Weisberg.
But discount retailer Target fell 1.2 percent to $50.06
after it gave a tepid view of its first-quarter outlook even as
it posted a fourth-quarter profit slightly above expectations.
[].
(Editing by Kenneth Barry)
