Dow Tumbles 184 On Consumer Spending Worries
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Higher oil prices and sliding consumer confidence sent stocks plunging yesterday as a weak sales report from Wal-Mart Stores Incorporated raised concerns about discretionary spending. The Dow Jones industrial skidded 184 points.
Although the Conference Board’s consumer confidence index fell less than expected, investors were nervous about an eroding consumer picture after Wal-Mart blamed its modest sales on the impact of gasoline and utilities prices on its customers.
More declines for the American dollar fueled jitters about inflation and slowing global growth amid sharp drops in overseas stock markets. A broker’s downgrade of General Motors Corporation. also added pressure to the Dow industrials.
Yesterday’s selling followed three straight days of gains last week, when mild economic data calmed inflation fears and temporarily halted a steep twoweek slide. Investors have been wary of the chance for more rate hikes; this week’s key figures on labor costs and wages are expected to provide some guidance on the Federal Reserve’s next move.
Ken Tower, chief market strategist for Schwab’s CyberTrader, said he was still optimistic about a growing consensus that the economy remains in good shape and that inflation is under control, which could keep the Fed from boosting rates.
“This pullback is not what you would’ve wished for, but it’s still in the context of a recovering market,” Mr. Tower said.”If we’re in an ongoing rally phase, this is where we ought to bottom out and see the market move higher.”
The Dow plummeted 184.18, or 1.63%, to 11,094.43, giving back all of the 180 points it gained in last week’s runup. The Dow lost 214 points on May 11, its biggest one-day decline in three years.
Broader stock indicators retreated sharply.The Standard & Poor’s 500 index dropped 20.28, or 1.58%, to 1,259.84; the Nasdaq composite index plunged 45.63, or 2.06%, to 2,164.74, falling back into negative territory for 2006.
Renewed uncertainty about interest rates sent bonds lower, with the yield on the 10-year Treasury note climbing to 5.08 percent from 5.05% late Friday.
