Posted at 10:58 a.m., Tuesday, July 29, 2003
Stocks fall on drop in consumer confidence
By Hope Yen
Analysts said investors were disappointed but largely willing to wait for other economic reports this week before selling off too aggressively.
“This is a heavy week for statistics and ... these numbers are critical to breaking out of our current trading range,” said Janet Engels, senior vice president and director of private client research at RBC Dain Rauscher.
“To me, the consumer confidence is a bad start which might suggest we break out on the low end if the data points are as disappointing as today’s were,” she said.
The Dow closed down 62.05, or 0.7 percent, at 9,204.46, having slipped 18 the previous session. Earlier in the day, the blue chips fell as much as 98 points.
The broader market also finished lower. The Nasdaq composite index lost 3.96, or 0.2 percent, to 1,731.40. The Standard & Poor’s 500 index fell 7.24, or 0.7 percent, to 989.28.
The Conference Board reported that its consumer confidence index slid to 76.6 in July from 83.5 in the previous month, amid consumer jitters about rising unemployment. Analysts had expected a reading of 85.0. The index is closely watched because consumer spending accounts for about two-thirds of the domestic economy.
“Consumer confidence came out and took the steam out of everything,” said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm. “It all boils down to concerns about unemployment.”
“We are a consumer-driven economy, and if they can’t find jobs, they can’t spend,” he said.
Rumors that U.S. forces had captured Saddam Hussein helped minimize losses. In Iraq, U.S. forces arrested a bodyguard who rarely left Saddam Hussein’s side, feeding speculation on Wall Street that the former dictator was in custody. The Dow rose as much as 23 points before losing momentum in the late afternoon.
While stocks have rallied in recent months, investors are now looking for evidence that the economy is firmly on track. Several reports due out this week, including the gross domestic product Thursday and employment on Friday, are expected to give the market a clearer direction after weeks of choppy trading.
“The employment data on Friday will be a biggie,” Dunay said. “A lot of economic data is showing improvement, and earnings are not bad, but you can’t have unemployment continuing to move up without it starting to be a big problem for the economy.”
Tyco International fell 75 cents to $19 after the manufacturing conglomerate swung to a profit in its fiscal third quarter. The company, which has been hit by charges of accounting fraud, also filed restated financial results dating back to 1998 that did not affect current earnings.
Verizon Communications lost 58 cents to $35.40 after the telecom company notched quarterly profits that were a penny higher than analysts’ forecasts.
Gainers included McDonald’s, which rose 89 cents to $22.15.
Declining issues outnumbered advancers 8 to 5 on the New York Stock Exchange. Volume was moderate.