'Too much good news' pushes stocks down
NEW YORK » Interest rate worries sent share prices lower yesterday on Wall Street after strong consumer confidence and home sales data signaled that the economy is holding up better than expected and suggested that the Federal Reserve has room for more rate increases.
Crude oil prices fell following an announcement by President Bush that he would waive regional clean-air specifications for summer-grade gasoline to attract more imports of fuel to the United States. Bush also said he would halt deposits of oil to the nation's strategic petroleum reserve until fall, but analysts said the measure would have little impact on crude prices and certainly not help make gasoline any cheaper.
Light sweet crude for June delivery settled 45 cents lower at $72.88 a barrel on the New York Mercantile Exchange, dropping on the heels of a 4.48-cents-per-gallon decline in May gasoline futures, which finished at $2.1291 a gallon.
The Dow Jones industrial average dropped 53.07, or 0.5 percent, to 11,283.25.
Broader stock indicators also fell. The Standard & Poor's 500 index slipped 6.37, or 0.5 percent, to 1,301.74, while the Nasdaq composite index fell 3.08, or 0.1 percent, to 2,330.30.
Bond prices drifted lower, with the yield on the 10-year Treasury note edging up to 5.071 from 4.98 percent late Monday. The dollar was stable against other major currencies, while gold rose.
The Conference Board said consumers shrugged off higher gasoline prices in April and sent its widely watched barometer of consumer confidence to its highest level in almost four years. The private research group said its consumer confidence index rose to 109.6 from a revised 107.5 in March. April's reading was the highest since the index touched 110.3 in May 2002. Analysts had expected a reading of 106.4.
Still, the survey was taken before the worst of the month's gas price increases hit the pumps, which raised the possibility of a drop in confidence when the May survey is taken.
The National Association of Realtors, meanwhile, said sales of previously owned homes edged up slightly in March.
The strength in both numbers suggested the Fed may be in a position to raise rates beyond the quarter percentage point increase widely expected at its next meeting in May.
"We're in a funny space," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons in St. Louis. "Too much good news is not good news because the market worries about the Fed."