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Dow hears whispers of confidence, drops

Stocks started a modest comeback Tuesday from Monday's tumble, but many blue chips gave up ground once again, leaving major stock indexes mixed.

Behind the gyrations was renewed concern that continued evidence of a strong economy would keep the Federal Reserve vigilant about fighting inflation, with a rate increase an option. Fear that the Fed might lift short-term rates sent the Dow Jones Industrial Average on a 146.98-point nose dive Monday.

The market seemed poised to recoup some of those losses early Tuesday after some analysts along with officials at the White House and the Fed said that inflation pressures were not evident. At one point, the blue-chip average was up 88.93 points, but it reversed course after a report of an increase in consumer confidence reignited investors' fears about inflation.

The Dow ended down 18.68 points, at 8,898.96. The Standard & Poor's 500 index slipped 1.43 points. But the Nasdaq composite index rose 11.46, to 1,831.77.

Analysts said that an interest rate increase was not necessarily likely, but they pointed to other problems. Overvalued stocks, strong consumer confidence and increasing consumer demand could lead to inflation, warned Hugh Johnson, chief investment officer at First Albany Corp.