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Consumer confidence
report shakes market
NEW YORK » An unexpected and sharp decline in consumer confidence jolted Wall Street yesterday, sending stocks lower on investor fears of a stumbling economy in the months ahead.
Analysts said investors were disappointed but largely willing to wait for other economic reports this week before selling off too aggressively.
"This is a heavy week for statistics and ... these numbers are critical to breaking out of our current trading range," said Janet Engels, senior vice president and director of Private Client research group at RBC Dain Rauscher.
"To me, the consumer confidence is a bad start which might suggest we break out on the low end, if the data points are as disappointing as today's were," she said.
Declining issues outnumbered advancers about 8 to 5 on the New York Stock Exchange. Consolidated volume was moderate at 1.84 billion shares, compared with 1.65 billion traded Monday.
The Dow Jones industrial average closed down 62.05, or 0.7 percent, at 9,204.46, having slipped 18 the previous session. Earlier in the day, the blue chips fell as much as 98 points.
The broader market also finished lower. The Nasdaq composite index lost 3.99, or 0.2 percent, to 1,731.37. The Standard & Poor's 500 index fell 7.24, or 0.7 percent, to 989.28. The Russell 2000 index slipped 0.23, or 0.1 percent, to 473.60.
The price of the Treasury's 10-year note dropped 1 23/32 point, while its yield rose to 4.43 percent from 4.31 percent Monday. Two-year Treasury notes were down 5/32 point and yielded 1.69 percent, up from 1.62 percent Monday.
The Conference Board reported that its consumer confidence index slid to 76.6 in July from 83.5 in the previous month, amid consumer jitters about rising unemployment. Analysts had expected a reading of 85.0. The index is closely watched because consumer spending accounts for about two-thirds of the domestic economy.
"Consumer confidence came out and took the steam out of everything," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm. "It all boils down to concerns about unemployment."
"We are a consumer-driven economy, and if they can't find jobs, they can't spend," he said.
While stocks have rallied in recent months, investors are now looking for evidence that the economy is firmly on track. Several reports due out this week, including the gross domestic product tomorrow and employment on Friday, are expected to give the market a clearer direction after weeks of choppy trading.
"The employment data on Friday will be a biggie," Dunay said. "A lot of economic data is showing improvement, and earnings are not bad, but you can't have unemployment continuing to move up without it starting to be a big problem for the economy."
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