NEW YORK >> Stock prices fell sharply today on a report of slumping consumer confidence that increased Wall Street's fears that a business turnaround is still a long way off. Waning consumer
confidence rattles stocksAssociated Press
The report from the Conference Board disheartened investors who had been consoled in recent months by the fact that consumers kept buying houses, cars and clothes, although at a slower pace.
"The consumer is the glue that is holding things together," said Jon Brorson, director of equities at Northern Trust, adding that there is a fear on Wall Street that Americans will "get really afraid and hibernate and really send the economy south."
Analysts said the decline in consumer confidence could trigger another downward cycle for the market. Certainly, that appeared to be the case today, when the Dow Jones industrial average ended off 160.32, or 1.5 percent, at 10,222.03. The Nasdaq composite index fell 47.43, or 2.5 percent, to 1,864.98, and the Standard & Poor's 500 index declined 17.70, or 1.5 percent, to 1,161.51.
Decliners outnumbered advancers slightly more than 3 to 2 on the New York Stock Exchange, with 1,880 down, 1,225 up and 219 unchanged. Volume was 967.77 million shares vs. 846.47 million yesterday.
The NYSE composite index fell 7.10 to 598.84, the American Stock Exchange composite index dropped 9.92 to 878.79 and the Russell 2000 index lost 4.73 to 474.20. The Treasury's 10-year note rose 21/32 to 101 9/32; its yield fell 9 basis points to 4.84 percent. The 30-year bond gained 26/32 to 99 17/32; its yield fell 6 basis points to 5.41 percent.
Investors were also worried about the Commerce Department's report on the gross domestic product due out tomorrow. The report will be a second estimate of how the economy fared during the second quarter; in its first estimate, issued July 27, the government said the economy rose a meager 0.7 percent.
The market fell in early trading today, and widened its loses after the Conference Board said consumer confidence fell for the second straight month in August amid concerns over layoffs and unemployment. The business research group said its Consumer Confidence Index fell to 114.3 from a revised 116.3 in July, a weaker showing than analysts expected.
"Buyers simply have no sense of urgency to commit in the current, uncertain environment. They know they are going into a bleak earnings period in the third quarter and the earnings (warnings) are going to come right after Labor Day," said Bill Barker, investment consultant for Dain Rauscher.
Sun Microsystems fell 94 cents to $13.56 after Goldman Sachs cut its fiscal 2002 earnings forecast for Sun to 28 cents a share from 37 cents, citing a slow economic recovery and the possibility of more layoffs.