Income, Dell reports pummel Wall Street
NEW YORK » Wall Street tumbled yesterday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed. The Dow Jones industrial average fell more than 170 points, while a disappointing profit report from computer maker Dell Inc.
weighed on the technology-heavy Nasdaq composite index. Dell's report late Thursday and its cautious comments about spending in the sector sent the stock tumbling $3.48, or 14 percent, to $21.73.
Meanwhile, investors charted the path of Hurricane Gustav as it heads toward the Gulf of Mexico and its oil rigs and refineries.
Wall Street's retreat following the downbeat news about consumers also comes after several days of sizable gains in stocks and on the final session before the long Labor Day weekend. Pre-holiday trading is generally light and some pullback was to be expected.
Still, investors were uneasy after the Commerce Department reported that personal incomes fell by 0.7 percent in July - well beyond the drop of 0.1 percent that analysts polled by Thomson/IFR had predicted.
As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending fell by 0.4 percent in July. Wall Street has been concerned about Americans' ability to help the economy grow, as high prices for gas and food have strapped many household budgets.
"My biggest concern with the income data is that we're getting off to a weak start to the third quarter," said Robert Dye, senior economist at PNC Financial Services Group. "The income numbers are a reminder that the economy is going to look worse before it gets better."
The Dow fell 171.63, or 1.47 percent, to 11,543.55 following a three-day advance of nearly 330 points.
Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 17.85, or 1.37 percent, to 1,282.83. The Nasdaq fell 44.12, or 1.83 percent, to 2,367.52.
The Russell 2000 index of smaller companies fell 8.29, or 1.11 percent, to 739.50.
Declining issues outnumbered advancers yesterday by nearly 2 to 1 on the New York Stock Exchange, where consolidated volume came to a weak 3.14 billion shares, compared with 3.73 billion Thursday.
For the week, the Dow and the S&P 500 each fell 0.73 percent and the Nasdaq fell 1.95 percent. And in August, the Dow rose 1.45 percent, the S&P 500 gained 1.22 percent and the Nasdaq added 1.80 percent.
Bond prices fell yesterday. The 10-year note's yield, which moves opposite its price, rose to 3.82 percent from 3.79 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 13 cents to $115.46 per barrel on the New York Mercantile Exchange. While oil trading has been orderly as Gustav progresses, there is concern about damage from the storm or a disruption in the flow of gasoline and other fuel from Gulf Coast refineries.