By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks edged lower on Tuesday, easing back from record territory a day earlier as weak economic data offset gains in Home Depot (HD) and other retail shares.
Seven out of the 10 S&P 500 sector indexes ended lower, led by financials (.SPSY) and industrials (.SPLRCI), while consumer discretionaries (.SPLRCD) led on the upside.
The day's data showed gains in U.S. home prices slowed in December, according to the S&P/Case-Shiller index, while the consumer confidence index fell more than expected in February.
Selling picked up slightly late in the session as traders unwound positions after the S&P 500 failed to break above Monday's intraday record high of 1,858.71, analysts said. The index remained in negative territory, down 0.2 percent, for the year.
"We tried to break out again and retest the highs, and since we failed, people are lightening up their positions they took earlier," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Home Depot shares jumped 4 percent to close at $80.98, giving the biggest boost to both the Dow and the S&P 500. Home Depot's earnings beat expectations, though sales fell more than expected in the fourth quarter.
The Dow Jones industrial average (^DJI) fell 27.48 points or 0.17 percent, to end at 16,179.66. The S&P 500 (^GSPC) slipped 2.49 points or 0.13 percent, to finish at 1,845.12. The Nasdaq Composite (^IXIC) dropped 5.38 points or 0.13 percent, to close at 4,287.587.
Shares of Macy's Inc (NYS:M) gained 6 percent to $56.25 after the department store operator reported a drop in January sales, but said fourth-quarter earnings rose from the previous year.
While many analysts have pinned the weakness to harsh winter weather rather than deteriorating fundamentals, the retail earnings suggest that spending has not dried up.
"There are a couple of credible pieces of information that didn't get caught in the snow drifts," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "Consumers are spending."
The S&P retail index (.SPXRT) rose 1.9 percent, while the consumer discretionary index gained 0.5 percent.
Investors are anxious to hear from Federal Reserve Chair Janet Yellen, who is due to speak on Thursday to the Senate Banking Committee in her semiannual testimony about monetary policy. Her comments will be scoured for insight into how bad weather has affected economic activity, as well as for confirmation that the Fed will not change its schedule for trimming stimulus.
Among other corporate results, Tenet Healthcare Corp (THC) late Monday swung to a net loss in its fourth quarter. Tenet's adjusted earnings, however, were better than expected. Its stock slid 9.1 percent to close at $43.93.
Perry Ellis International Inc (PERY) shares tumbled 17.5 percent to $12.93, their lowest level since late 2011, a day after the clothing company forecast a decline in quarterly revenue.
After the bell, shares of First Solar Inc (FSLR.O) dropped 12.3 percent to $50.90 after the solar panel maker reported that its fourth-quarter net income fell 58 percent.
About 6.7 billion shares changed hands on U.S. exchanges, below the 7 billion average so far this month, according to data from BATS Global Markets.
Decliners outnumbered advancers on the New York Stock Exchange by a ratio of 8 to 7. On the Nasdaq, nearly eight stocks fell for every five that rose.
(Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)