Stocks drop as consumer
confidence wanes

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By Adam Geller
Associated Press

NEW YORK >> Investors tried to shake off doubts about a decline in consumer confidence today, but lingering misgivings put an end to a two-day rally as stocks lost ground in largely indecisive trading.

The Dow Jones industrial average closed down 30.45, or 0.3 percent, at 10,115.26, after climbing 311.03 in the previous two sessions.

The broader market also fell. The Nasdaq composite index fell 2.92 or 0.2 percent, to 1,766.96. The Standard & Poor's 500 index was essentially unchanged, off 0.05 to 1,109.38.

Advancing issues outnumbered decliners by an 11-to-8 ratio on the New York Stock Exchange, with 1,792 up, 1,330 down and 215 unchanged. Volume came to 1.29 billion shares, compared with 1.33 billion yesterday.

The NYSE composite index rose 0.98 to 577.34, the American Stock Exchange composite index advanced 2.24 to 864.41 and the Russell 2000 index, the barometer of smaller company stocks, rose 3.10 to 471.29.

The Treasury's 2-year note fell 332 to 99 31/32; its yield rose 5 basis points to 3.02 percent. The 10-year note fell 1/2 to 99 2332; its yield gained 6 basis points to 4.91 percent. The 30-year bond dropped 21/32 to 99 1532; its yield rose 5 basis points to 5.41 percent.

Analysts said the market, which has been characterized by ups and downs for weeks, had been poised for more uncertainty regardless of the news on consumer confidence.

"We've been now for 6 1/2 weeks in a range-bound correction," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. in St. Louis. "The problem today is we were subject to some profit-taking, and that was going to happen good news, bad news or no news."

The news today was in an announcement by the Conference Board that its Consumer Confidence Index fell to 94.1 this month from a revised 97.8 in January. Analysts had expected a reading of 97.

The decline, reversing two consecutive monthly gains, reflects increasing pessimism about the job outlook and the economy.

Analysts said the drop-off in stock prices grew out of concerns that consumers, whose spending has been largely responsible for lifting the battered economy, might be wearing down. But as investors studied the report, those concerns eased somewhat.

"Anyone can point to this statistic and say 'Here's the consumer, starting to give ground'," said Joseph V. Battipaglia, chief investment strategist at Gruntal & Co. in New York. "That would spook the market and that's what we see playing out here."

In addition to the consumer confidence report, analysts attributed the market's morning drop to a rumor, quickly denied by the Pentagon, that the U.S. had ground troops in Iraq.

Investors are obsessing less about Enron and other corporate controversies and focusing more on improving earnings and economic news, said Arthur Hogan, chief market analyst at Jefferies & Co.

Several companies reporting earnings today fit that pattern.

Federated Department Stores rose $2.64 to $41.66 after it raised its estimates for earnings for the year.

But shares of fellow retailer Home Depot were down 56 cents to $51.51, after it reported earnings that slightly exceeded expectations. Mild winter weather and consumers' torrid spending on their homes helped Home Depot reported a 53 percent jump in fourth-quarter profit.

The world's largest home improvement retailer said net income was $710 million, or 30 cents per share, up from $465 million, or 20 cents per share, in the same period of 2000.

Analysts surveyed by Thomson Financial/First Call had expected Home Depot to earn 28 cents per share.

Sales rose 29 percent to $13.5 billion, helped by a 14th week in the fourth quarter, which ended this month.

The seven extra days added $880 million in sales and boosted per-share earnings by 3 cents, the Atlanta-based company said.

Appliance maker Whirlpool saw its shares rise $5.15 to $73.40 after it bolstered its estimate for first-quarter earnings, putting it ahead of estimates by analysts.

Hewlett-Packard rose 3 cents to $20.01 after one of its larger shareholders, Brandes Investments, reportedly said it would oppose its merger with Compaq Computer. Compaq was down 20 cents to $10.40.

Overseas, markets were mostly higher today. In afternoon trading in Europe, Germany's DAX index, France's CAC-40 and Britain's FT-SE 100 each gained about 0.8 percent. But Japan's Nikkei stock average fell 0.9 percent.