Stocks Slump on Negative Reports
A record U.S. trade deficit and a surprising drop in consumer confidence sparked profit taking on Wall Street on Friday, sending stocks lower despite the week’s bullish economic news from the Federal Reserve.
The sell-off was prompted by an unexpected 10-point dive in the University of Michigan’s mid-February consumer sentiment index. And before the session began, the Commerce Department reported that the trade deficit in 2003 was $489.4 billion, an increase of a 17.1% from the previous record of $418 billion set in 2002.
The Dow lost 66.22 points, or 0.62%, to end at 10,627.85. The broader S&P; 500 fell 6.30 points, or 0.55%, to 1,145.81. The tech-heavy Nasdaq shed 20.05 points, or 0.97%, to end at 2,053.56 despite strong earnings from technology bellwether Dell Inc.
The consumer confidence report boosted U.S. Treasuries, while the dollar clawed back from early losses. Oil prices jumped higher as concerns persisted about low global fuel stocks after the OPEC oil cartel’s pledge this week to cut crude production.
Stocks have dipped for two straight sessions after a rally Wednesday prompted by comments by Federal Reserve Chairman Alan Greenspan to Congress. Blue-chip stocks soared to 32-month highs after Greenspan depicted a vigorously growing but suggested no interest-rate hike was imminent.
Investors now doubt Greenspan’s upbeat review, said John Davidson, president of Partner Re Asset Management Corp.
“If consumer confidence is falling and the weekly jobs claims actually rose, most of the actual news this week was not that good on the economy despite the fact that Greenspan said it was pretty good,” he said.
Declining issues outnumbered advancers by a 2-to-1 ratio on the New York Stock Exchange on Friday, where consolidated volume came to 1.69 billion shares, compared with 1.91 billion Thursday.
It was the fourth straight week of declines for the Nasdaq, while the Dow and S&P; 500 have gained in each of the last two weeks. Next week is a shortened week for trading, with U.S. stock markets closed Monday for Presidents Day.
Despite the trade deficit figure there was good news in the Commerce Department report. U.S. exports totaled $1 trillion, the best showing since 2000 and a 4.6% increase from 2002.
Among Friday’s highlights:
* Comcast Corp., which has made an unsolicited $49-billion offer to acquire Walt Disney Co., saw its shares slip 16 cents to $29.90. Disney fell $1.08 to $26.92 after two days of strong gains.
* Safeway Inc. dropped 6 cents to $22.43. The grocer, already struggling with a major labor strike in California, posted a fourth-quarter loss of $1.57 a share Thursday, but beat analysts’ estimates for operating profit.
* Technology stocks were mixed. Dell jumped 98 cents to $34.55 after posting fourth-quarter earnings that beat estimates by a penny a share and gave a stronger outlook on corporate technology spending. Video microchip maker Nvidia Corp. fell 22 cents to $23.30 after it beat Wall Street expectations by 3 cents a share in its fiscal fourth quarter.
Bond prices were given a lift by the consumer sentiment numbers, causing yields to drop. Yields on the new 10-year note dipped to 4.04% after the note sold at 4.06% in Thursday’s auction of $16 billion in new paper.
Crude oil for March delivery rose 58 cents, or 1.7%, to settle at $34.56 a barrel on the New York Mercantile Exchange, the highest close since Feb. 2.
The dollar gained against the euro, which had its biggest drop in more than two weeks against the dollar on speculation the European Central Bank would sell its currency for the first time to prevent a two-year rally in the euro from diminishing demand for exports.
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Market Roundup, C4-5
