Weakening economy pushes stocks down
| • | Hawai'i Stocks |
| • | Up-to-the-minute market chart |
By Lisa Singhania
Associated Press
NEW YORK — The weakest consumer confidence report in 7 years sent stocks sharply lower today for a second straight session as Wall Street got another reminder that the economy faces a difficult recovery.
Continued profit-taking from this month's big run-up, as well as reaction to more disappointing earnings, also contributed to the decline.
The Dow Jones industrial average closed down 147.52, or 1.6 percent, at 9,121.98, according to preliminary calculations. It was the index's worst finish in three weeks, when the Dow closed at 9,052.44 on Oct. 9. The index has now lost a total of 423 points over the past two sessions.
Broader stock indicators also dropped. The Standard & Poor's 500 index was off 18.51, or 1.7 percent, at 1,059.79, and the Nasdaq composite index lost 32.11, or 1.9 percent, to 1,667.41.
The losses accelerated early in the session when the Conference Board released a survey showing consumer confidence at 85.5 in October, well below the 97 recorded the previous month and the 96 that analysts were predicting.
"These numbers reflect the profound unease that many Americans feel right now because of these terror attacks and warnings and anthrax. And if you're scared, you're not going to go to a mall and go shopping and that's going to impact the level of recovery," said Charles Pradilla, chief investment strategist at SG Cowen.
"The recovery is going to occur, but what this tells us is that it's going to be much more muted even though we have ... very low interest rates and an awful lot of fiscal stimulus out there."
Two other economic reports due out later this week will also be closely watched. Preliminary third-quarter gross domestic product, due out tomorrow, is expected to show negative growth — if fourth quarter GDP growth is also negative, it would meet the traditional definition of a recession.
Meanwhile, on Friday, the Labor Department releases its October employment assessment.
In trading today, Philip Morris dropped $1.98 to $47.70 after Goldman Sachs removed the stock from its recommended buy list. Citigroup fell 85 cents to $45.55 as part of a broader decline among financial issues on worries that the slowing economy will hurt creditors and debtors.
Tech issues were weak, too, as investors locked in profits from the sector's significant gains this month. Intel fell 64 cents to $23.54, adding to a decline of $1.68 on yesterday.
Procter & Gamble gained $2.90 to $74.20 on earnings that dipped slightly but were still ahead of analysts' estimates. The consumer goods company also reaffirmed its 2002 forecasts.
The market had been rebounding all month from the selloff that followed the Sept. 11 terrorist attacks. That advance stalled yesterday, when stocks sold off sharply on profit-taking. Before that decline, the major indexes had managed to regain much of their post-attack loss and were trading at levels near or above their Sept. 10 closes.
The Dow is still 3.1 percent above where it started October, the Nasdaq is up 11.3 percent and the S&P has gained 1.8 percent.
Analysts also attribute this week's selloff to portfolio adjustments by mutual fund managers as the end of the month approaches. They note that the market had problems before the Sept. 11 attacks on the World Trade Center and the Pentagon.
"It's hard to know what's going to happen because we're in such an unusual time right now," said Bob Streed, portfolio manager of Northern Select Equity Fund. "The big picture right now, which we sometimes forget, is that we are in a bear market and the bias is to go down."
