Posted at 10:54 a.m., Tuesday, August 31, 2004
Stocks gain despite drop in consumer confidence
By Michael J. Martinez
The plunge in the Conference Board's consumer confidence index, which fell to 98.2 in August from 105.7 in July, kept stocks lower for much of the day and raised concerns on Wall Street that a lack of new jobs could extend the summer's economic slowdown through the third quarter, or perhaps longer. Data on Midwest manufacturing activity also showed a sharp decline for the month.
With oil prices extending their losses, buyers did move back into the market at the end of the session. Still, the turnaround was likely exaggerated because of the light turnover; many investors have stayed out of the market entirely during the Republican National Convention.
"It's hard to make anything out of this rise with the light trading we're in right now," said Brian Pears, head equity trader at Victory Capital Management. "No matter how you look at it, the economic numbers weren't good. We're really going to need to see evidence that this summer was a soft spot and not something prolonged."
According to preliminary calculations, the Dow Jones industrial average was up 51.40, or 0.5 percent, at 10,173.92.
Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index gained 5.09, or 0.5 percent, to 1,104.24, and the Nasdaq composite index was up 1.61, or 0.1 percent, at 1,838.10.
The major indexes ended August with the Dow rising 0.2 percent and the S&P edging 0.1 percent higher, while the Nasdaq tumbled 2.8 percent for the month.
The consumer confidence index reading fell far below the 103.5 expected by Wall Street, and, because consumers were focused on jobs, put even more of a focus on the government's August employment report, scheduled for release on Friday. The government's payroll figures have been disappointing Wall Street all summer.
The Chicago Purchasing Managers Index, a measure of manufacturing activity in the Chicago area, also fell below expectations, coming in at 57.3 in August, down from 64.7 in July and worse than the 60 forecast by economists. The Chicago PMI is considered a harbinger of the national manufacturing report to be issued tomorrow by the Institute for Supply Management.
"We're starting to see some reinforcement in the economic data that this is more than just a soft patch for the economy," said Michael Chren, senior director of value equity investment for the Armada Funds. "I think Friday we'll have another very powerful data point with the jobs figure coming out, and if that's lower than expected, that will really throw fuel on the fire."