The Conference Board said shortly after the opening bell that its gauge of consumer confidence fell to 84.8 from 91.7 in July. The consensus on Econoday was for a rise to 93 this month.
"Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead," said Lynn Franco, senior director of economic indicators at the Conference Board.
Jefferies economists Thomas Simons and Aneta Markowska said the board's presentation index's fall to 85.2 reading from 88.9 last month "suggests that the expiration of the $600 enhanced unemployment insurance benefits really took a bite out of confidence via consumers' views of their financial situation."
Those benefits expired at the end of July and while President Donald Trump's subsequent executive order to provide $400 in weekly aid, the economists said many states aren't participating because they lack the budget capacity. Lawmakers in Washington, DC have been unable to agree on a new fiscal stimulus package.
Still, the Standard & Poor's 500 and Nasdaq ended at record highs.
Communications services led advancing sectors, rising about 1%. Facebook (FB) rose 3.5%, and Alphabet (GOOGL) added 1.3%.
Health care shares rose 0.7%, led higher by Amgen's (AMGN) 5.4% pop after Dow Jones Indices said late Monday that the biotechnology company would be added to the Dow Jones Industrial Average at the start of next week. Incyte (INCY) rose 1.4%.
Consumer discretionary and tech shares each added more than 0.5% as Gap (GPS) jumped more than 10% and Advanced Micro Devices (AMD) added 3.9%. Microsoft (MSFT) rose 1.3%.
Energy led declining sectors, dropping 1.4% as crude futures surged as the production in the Gulf Coast has been largely shutdown due to back-to-back severe storms in the region. Tropical Storm Marco made landfall on Monday while Hurricane Laura is expected to hit later this week. West Texas Intermediate and international benchmark Brent each jumped about 1.7% to $43.33 a barrel and $45.91 a barrel, respectively.
Exxon Mobil (XOM), which is also slated to be dropped from the Dow next week, lost 3.2%. Philipps 66 also slid 3.2%.
Best Buy (BBY) dropped 4% after the consumer-electronics retailer warned the spike in sales in its current quarter will not continue after its fiscal-second quarter results beat expectations.
JM Smucker (SJM) rose 6.9% after the food company lifted its full-year guidance after its latest quarter results beat views, driven by higher demand during the pandemic. Hormel Foods (HRL) slipped 2.1% after its earnings were flat in its latest quarter.
The DJIA ended 0.2% lower while the S&P 500 added about 0.4%. The Nasdaq rose almost 0.8%.
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