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The bulls on Wall Street took a breather on Tuesday as the markets gave back a portion of Monday’s 200-point surge amid modest disappointment over the latest signs the U.S. economy is slowing down.

Today’s Markets

The Dow Jones Industrial Average fell 38.00 points, or 0.36%, to 10636.38, the Standard & Poor's 500 sank 5.40 points, or 0.48%, to 1120.46 and the Nasdaq Composite dropped 11.84 points, or 0.52%, to 2283.52. The FOX 50 dropped 3.05 points, or 0.37%, to 812.07.

Wall Street was handed an excuse to give back some of Monday’s big gains as new reports revealed consumer spending unexpectedly flatlined and factory orders tumbled by twice as much as expected in June. Likewise, some major companies like Procter & Gamble (NYSE:PG) and Dow Chemical (NYSE:DOW) issued gloomy results.

While the markets closed solidly lower, they also erased most of their early losses and managed to preserve the vast majority of Monday’s surge. The Dow had been down as much as 74 points in early trading.

“We definitely see the trend going higher,” NYSE trader Maier Tarlow of Raven Securities told FOX Business. “A day like today is bullish in our eyes because you see a great move yesterday and you see the market pulling back small and every time they try to sell them off you see some type of support. It’s important to have some consolidation.”

Most of the 30 Dow stocks closed in the red, led by Procter & Gamble (NYSE:PG), Home Depot (NYSE:HD) and Travelers (NYSE:TRV). The index's best performers were ExxonMobil (NYSE:XOM) and Pfizer (NYSE:PFE), which rallied around its big earnings beat.

"I suspect that much of the euphoria we saw in yesterday’s launch for the month will likely fade as the focus for the 'Street' once again shifts back to the macro environment," Peter Kenny, managing director at Knight Capital Group, said in a note. "There are no clear signs of that happening from a technical stand point, it is simply my sense of what may trigger the next downdraft." 

Wall Street hit session lows Tuesday morning after the Commerce Department said U.S. factory orders slid by 1.2% in June, more than doubling the 0.5% drop the markets had already been bracing for. Excluding transportation, orders were down 1.1%. The government also downwardly revised its June durable goods and May factory orders figures to reflect drops of 1.2% and 1.8% respectively. 

Consumer discretionary stocks like Tiffany (NYSE:TIF) and Nordstrom (NYSE:JWN) took big hits as the Commerce Department issued a new report showing personal spending was unchanged in June, coming in shy of forecasts from economists for a 0.1% rise. Personal incomes were also unchanged, missing estimates for a rise of 0.2%. The Commerce Department also lowered its May figures to reflect a 0.1% rise in spending, down from 0.2% earlier.

The pair of weaker-than-expected economic reports are likely to only bolster worries that have emerged this summer that the U.S. economy could suffer a double-dip recession. A cluster of recent indicators suggest the economic recovery has slowed down amid high unemployment and the depressed housing market.

Separately, the National Association of Realtors said Tuesday its pending home sales index slid just 2.6% in June, beating estimates for a steeper drop of 5%. Despite exceeding expectations, the report helped cause a selloff in shares of home builders such as Pulte (NYSE:PHM) and Lennar (NYSE:LEN). 

The markets were also dealt a slew of disappointing quarterly reports from major companies as Dow Chemical’s (NYSE:DOW) profits and revenue missed estimates, Procter & Gamble’s EPS and outlook trailed expectations and MasterCard (NYSE:MA) reported weaker-than-expected revenue growth. P&G's stock slid more than 3%, making it the worst performer on the Dow, as its EPS of 71 cents missed estimates by two pennies and its forecast for the current quarter would fail to meet expectations. 

The health-care sector provided an important counterweight to those earnings misses as the group rallied around drug giant and Pfizer (NYSE:PFE). The Dow component saw its stock soar 6% after beating the Street with a non-GAAP profit of 62 cents a share, compared with estimates for just 52 cents. 

Meanwhile, auto makers reported mixed July sales figures amid the struggling economic recovery. Ford's (NYSE:F) stock slumped 1.9% after saying its July U.S. sales climbed just 3.1%. General Motors said sales at its four core brands jumped by 25% last month over the year before and overall sales grew by 5.4%. Chrysler said its U.S. sales were up 5% last month from the year before, while Toyota’s (NYSE:TM) U.S. sales slid 3.2% annually.

Despite the losses on Wall Street, the commodities complex moved mostly higher. A day after soaring near three month highs, crude oil rallied for the fourth session in a row, gaining $1.21 a barrel, or 1.49%, to $82.55. Gold rose $1.80 a troy ounce, or 0.15%, to $1,185.20. However, copper snapped a four-day winning streak, sinking 0.89% a pound to $3.355.

Corporate Movers

Dow Chemical (NYSE:DOW) swung back into the black during the second quarter but the chemical giant’s non-GAAP EPS of 54 cents came up shy of forecasts for 56 cents. Revenue jumped 20% to $13.62 billion, missing the Street’s view for $13.7 billion. Dow said it has not changed its view of a “sustained global recovery led by Asia, slowly helped by the U.S. recovery, but with Europe lagging.”

MasterCard’s (NYSE:MA) second-quarter net income jumped 31% and its EPS of $3.49 handily topped estimates for $3.33. However, the No. 2 U.S. card company’s revenue increased 6.7% to $1.37 billion, trailing estimate for $1.38 billion.

BP (NYSE:BP) announced plans to unload $1.9 billion of its Colombian assets to a joint venture between state-run Ecopetrol and Talisman. The move is the latest in a string of fundraising efforts by BP to pay for the massive oil spill in the Gulf of Mexico.

Baker Hughes (NYSE:BHI) saw its shares tumble 13% after the oil field services company said it earned just 23 cents a share last quarter, badly missing forecasts for 43 cents. Revenue climbed 44% to $3.37 billion, but that also came up shy of estimates.

Archer Daniels Midland (NYSE:ADM) beat the Street with fiscal fourth-quarter EPS of 69 cents. However, revenue at the company slid 5% to $15.7 billion, disappointing analysts who had forecasted $16.47 billion.

DR Horton (NYSE:DHI) swung to a fiscal third-quarter profit of 16 cents a share that met Wall Street’s expectations. The home builder’s revenue soared 51% to $1.38 billion, topping estimates for $1.32 billion. Closings surged 60% last quarter to 6,805 homes, but net sales orders slid 3% to 4,921.

OfficeMax (NYSE:OMX) sank 13% after reporting an unexpected 0.3% decline in sales to $1.65 billion, missing the Street’s view of $1.67 billion. OfficeMax also warned its third-quarter sales are likely to be lower than the year-earlier period's. However, the No. 3 U.S. office supplies retailer reported non-GAAP EPS of 12 cents, significantly beating estimates for a break-even quarter.

Global Markets

U.K.'s FTSE 100 slipped 0.01% to 5396.48, France's CAC 40 sank 0.12% to 3747.51 and Germany's DAX gained 0.25% to 6307.91.

In Asia, Tokyo's Nikkei 225 jumped 1.3% to 9694.01, Hong Kong's Hang Seng rose by 0.2% to 21457.70 and China's Shanghai Composite lost 1.7% to 2617.00.