NEW YORK >> A sharp drop in consumer confidence stifled investors' enthusiasm for stocks today, sending the market sharply lower and more than wiping out yesterday's gains. Technology suffered the worst of the selling, following bearish comments from Intel's chief executive. Stocks fall with
consumer confidenceBy Amy Baldwin
Associated PressBut because the market was primed for profit-taking anyhow following five winning weeks on Wall Street, analysts were pleased that a bigger selloff didn't develop.
"The market is getting some heartburn today from the consumer confidence number," said David Sowerby, chief market analyst, Loomis, Sayles & Co. in Detroit. "But at the same time, what gives me some encouragement is that the rally that started on July 23 is not being derailed."
Declining issues outnumbered advancers about 8 to 5 on the New York Stock Exchange, where volume was light. The Dow Jones industrial average closed down 94.60, or 1.1 percent, at 8,824.41. The erased the Dow's 46-point gain from yesterday. But, the Dow is still up more than 1,100 from its July 23 closing low of 7,702.34.
The market's broader gauges also retreated. The Nasdaq composite index fell 43.92, or 3.2 percent, to 1,347.82, having gained 11.12 yesterday. The Standard & Poor's 500 index declined 13.12, or 1.4 percent, to 934.83 following a gain of 7.09. The Russell 2000 index fell 9.14, or 2.2 percent, to 398.59.
The price of the Treasury's 10-year note was down 13/32 point today, while its yield rose to 4.28 percent from 4.23 percent late yesterday. Two-year Treasury notes were down 3/32 point and yielded 2.22 percent, up from 2.16 percent yesterday.
Investors were disheartened by a report from the Conference Board that its Consumer Confidence Index fell to 93.5 from a revised 97.4 in July. Analysts had been expecting a reading of 97.0.
That bad news erased early gains in blue chips, with the Dow rising as much as 98 points, that followed an upbeat report on durable goods orders. The Commerce Department said orders for big ticket goods surged by 8.7 percent in July, the largest increase in nine months and far better than analysts' expectations.
Still, analysts deemed today's batch of economic news to be mostly positive, because consumers have remained rather strong throughout the economic downturn. The durable goods orders are a greater indication that the economy is recovering, not slipping back into recession, analysts said.
Intel fell 95 cents to $17.18 following bearish remarks today by CEO Craig Barrett. According to published reports, Barrett said he expects modest growth in third-quarter earnings but said capital spending in the computing sector continues to lag.
Other tech stocks fell, including Dell Computer, down 73 cents at $27.15. Hewlett-Packard declined 64 cents to $14.21 ahead of its earnings report due out later in the day.
Gainers included some makers of durable goods. Whirlpool rose 72 cents to $57.38, and DaimlerChrysler gained 44 cents to $44.76.
Overseas, Japan's Nikkei stock average finished down 1.6 percent. But stocks were higher in Europe, where Germany's DAX index rose 1.8 percent, France's CAC-40 climbed 2.9 percent, and Britain's FTSE 100 gained 1.4 percent.