Posted on: Wednesday, April 27, 2005
Consumer confidence drop triggers selloff
By Michael J. Martinez
Associated Press
NEW YORK — Nervous investors bid stocks lower yesterday as conflicting economic data prompted them to pull money out of the market ahead of next week's Federal Reserve decision on interest rates.
But a drop in consumer confidence to its lowest level in five months worried investors, and many remained on the sidelines in the hopes that the Fed next week could provide clarity on the economy.
"In a way, this week is kind of a wash, because everyone is going to be holding their breath for the Fed," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers in Boston. "But really, earnings are going pretty strong and the economy is still growing and moving in the right direction, and stocks look pretty cheap right now."
Oil prices retreated for a second session, with a barrel of light crude settling at $54.20, down 37 cents, on the New York Mercantile Exchange. The bond market fell alongside stocks, with the yield on the 10-year Treasury note rising to 4.27 percent from 4.25 percent late Monday.
Declining issues outnumbered advancers by nearly 5 to 2 on the New York Stock Exchange, where consolidated volume came to 1.99 billion shares, compared with 1.82 billion shares at the same point on Monday.
With Wall Street concerned about inflation and the Fed's interest rate policy, the Commerce Department's report showing a surprise jump in new home sales last month assuaged fears that higher rates would curtail consumers' willingness to buy homes. And oil prices also fell one day after reaching the $56 level, further easing fears that inflation might take hold.
