Despite upbeat news from the housing and labor markets, stocks are headed lower following a disappointing estimate of consumer confidence released this morning by The Conference Board. At roughly halfway through the trading session, the Dow Jones Industrial Average (DJINDICES:^DJI) is down by 80 points, or 0.61%.

Two favorable economic reports were the impetus for an early rally in stocks. First, the Census Bureau estimated that new-home sales rose last month to their highest level in more than two years, coming in at an annualized rate of 377,000. This represented a 4.4% increase over October and a 15% gain from November 2011.

Second, the Labor Department said that the number of Americans filing for unemployment benefits fell last week to its lowest level in more than four years. A total of 350,000 people filed for initial jobless claims for the week ended Dec. 21. This was down from the preceding week's 362,000. It also handily beat the consensus forecast of 375,000 claims.

By midmorning, however, the market had changed direction, heading sharply lower. The cause for the fall was similarly twofold. First, The Conference Board revealed that its index of consumer confidence fell to 65.1 this month from 71.5 in November. While this was a steeper decline than expected, it's nevertheless not wholly surprising, as figures published earlier this week showed that holiday retail sales weren't as robust as expected, due presumably to downbeat consumer sentiment.

Second, the probability that the so-called fiscal cliff will be resolved before the economy careens over it is becoming increasingly doubtful. Late yesterday, Treasury Secretary Timothy Geithner warned that the federal government will hit the debt ceiling by the end of this year unless lawmakers agree to lift it. In the absence of an agreement, Geithner said that his department would begin taking "extraordinary measures" to avoid this potentiality. And this morning, Senate Majority Leader Harry Reid acknowledged everyone's fears by intimating that the economy will indeed careen over the cliff.

In terms of individual stocks, financial companies are leading the Dow lower, with Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and American Express (NYSE:AXP) heading up the laggards. Suffice it to say, anything like the fiscal cliff that could push the economy into a recession will be felt by lenders like these, as consumers and businesses lose the ability to service their loans. The only Dow components headed higher, alternatively, are Wal-Mart (NYSE:WMT) and Coca-Cola (NYSE:KO), both of which are well-known defensive stocks.

John Maxfield owns shares of Bank of America. The Motley Fool owns shares of Bank of America and JPMorgan Chase. Motley Fool newsletter services recommend American Express and Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.