Stocks Slip on Drop in Consumer Confidence
The stock market finished little changed Tuesday, as a surprising decline in consumer confidence helped to cut short a two-session rally.
But many of the hottest stock groups of recent weeks--including home builders and discount retailers--continued to advance, paying little heed to concerns that consumers may be growing more cautious.
Treasury bond yields jumped in advance of Federal Reserve Chairman Alan Greenspan’s testimony before Congress today. He is expected to sound mostly upbeat about the economy.
On Wall Street the Dow Jones industrials eased 30.45 points, or 0.3%, to 10,115.26, after rallying 311.03 points in the previous two sessions.
The Nasdaq composite index slipped 3.02 points, or 0.2%, to 1,766.86, and the Standard & Poor’s 500 index was off fractionally.
The Conference Board said its consumer confidence index fell to 94.1 this month from a revised 97.8 in January. Analysts had expected a February reading of 97.
The decline, reversing two consecutive monthly gains, reflects increasing consumer pessimism about the job outlook and the economy, analysts said.
“Anyone can point to this statistic and say, ‘Here’s the consumer, starting to give ground,’” said Joseph V. Battipaglia, investment strategist at Gruntal & Co. in New York. “That would spook the market and that’s what we see playing out here.”
Stocks rallied at the opening bell, then quickly slumped. In addition to the consumer confidence report, analysts attributed the market’s morning slide to a rumor, quickly denied by the Pentagon, that the U.S. had ground troops in Iraq.
Still, some experts said the market’s performance of the last few days suggests it might be shaking off concerns about corporate accounting scandals in the aftermath of the collapses of Enron and Global Crossing.
Rising stocks outnumbered losers Tuesday by 18 to 13 on the New York Stock Exchange and by 9 to 8 on Nasdaq.
The Dow on Monday reached its highest close since Jan. 8, and is up nearly 1% year to date. But Nasdaq is down 9.4% this year.
In the bond market, yields on longer-term Treasuries rose ahead of Greenspan’s testimony today. The 10-year T-note yield rose to 4.92% from 4.85% Monday.
“The risk is that [Greenspan] gives us a hint he is impressed” with the economy, David Robin, a strategist at Fimat USA, told Bloomberg News. Despite the consumer confidence data, other recent economic data have suggested a recovery has ensued, heightening bond investors’ expectations that the Fed may begin to raise rates later this year, Robin said.
Still, the 10-year T-note yield remains below its level of 5.05% at the end of 2001.
In commodities trading gold revived, with near-term futures gaining $5.30 to $298 an ounce in New York.
Among Tuesday’s highlights:
* Retailers continued to rally, led by Federated Department Stores, which rose $2.64 to $41.66 after boosting its expectations for 2002 earnings. Other retail winners included Target, up 97 cents to $45.72, and Wal-Mart, up $1.45 to $62.10.
* Home builders rose further after soaring Monday on reports of strong January sales. Ryland leaped $2.74 to $89.69 and Toll Bros. gained $3.32 to $47.30.
* Some major tech shares weakened, including Intel, off $1 to $30.32, and IBM, down $1.15 to $97.15.
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Market Roundup, C8-9
