NEW YORK >> A worse-than-expected consumer confidence report jarred Wall Street yesterday, prompting investors to cash in some profits from seven weeks of gains on fears of a tepid holiday season. Consumer confidence drop
hurts Wall StreetBy Hope Yen
Associated PressAnalysts said stocks were already expected to pull back somewhat on lighter trading in advance of the Thanksgiving holiday, when the market is closed. The consumer sentiment news simply gave investors another reason to sell.
"People want to see a strong confidence number, especially with the holiday season coming up," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. "If you don't see that, it doesn't bode well."
The Dow Jones industrial average declined 172.98, or 2 percent, to close at 8,676.42, according to preliminary calculations, after gaining 44 points Monday. It was the Dow's biggest drop in two weeks, since the blue chips fell 178 points on Nov. 11.
The broader market also finished lower. The Nasdaq composite index fell 37.49, or 2.5 percent, to 1,444.41. The Standard & Poor's 500 index dropped 19.56, or 2.1 percent, to 913.32.
Declining issues outnumbered advancers 2 to 1 on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, fell 6.53, or 1.6 percent, to 398.32. The NYSE composite index declined 9.22 to 483.40. The American Stock Exchange composite index fell 10.23 to 804.36.
The Conference Board said its Consumer Confidence Index rose to 84.1 this month from a nine-year low of 79.6 in October. The reading was the first increase in five months, but it fell below analysts' expectations of 85.0.
Analysts said the report failed to reassure investors as they sought to gauge how retailers might fare for the rest of the year. Consumer confidence drives consumer spending, which accounts for two-thirds of the nation's economic activity.
"It's important because it's in front of Black Friday," said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank, referring to the day after Thanksgiving, traditionally the busiest shopping day of the year.
"It's widely known at this point that the Christmas shopping season is six days shorter" because of the lateness of Thanksgiving, he said. "Investors are looking for signs of strong retail sales in a shortened period so that retailers can make their earnings numbers."
Investors, meanwhile, shrugged off two encouraging economic reports.
The Commerce Department reported the U.S. economy grew at a brisk 4 percent annual rate in the third quarter, faster than the original 3.1 percent rate estimated a month ago. The reading beat analysts' expectations.
And new home sales fell by 4.5 percent in October from the previous month to a seasonally adjusted annual rate of 1.01 million, the department said in another report.
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