Consumer confidence plunge sinks Wall Street

07:21, February 24, 2010      

Email | Print | Subscribe | Comments | Forum 

Investors' hope for a sustained recovery was dampened on Tuesday as U.S. consumers expressed pessimistic assessment of economic conditions. Market took the hit broadly as stocks tumbled across the board and a boosted green back pressured on commodities.

Dow logged triple digit points losses, while S&P and Nasdaq fell more than one percent. Only three stocks among the 30 Dow component stocks rose, while 27 fell.

As of Tuesday's closing, the Dow Jones dropped 100.97, or 0.97 percent, to 10,282.41. The Standard & Poor's 500 index fell 13.41, or 1.21 percent, to 1,094.60 and the Nasdaq lost 28.59, or 1.28 percent, to 2,213.44.

The private research group Conference Board said its consumer confidence index, which had increased in January, declined sharply in February. The index now stands at 46.0, down from 56.5 in January. The reading is much worse than average forecasts and is the lowest since April 2009.

Even worse, the index's gauge on consumers' assessment of current-day conditions decreased to 19.4 from 25.2, the lowest level since it reached 17.5 in February 1983.

Usually a reading of 90 of the consumer confidence index suggest the economy is on solid footing, while a reading above 100 means the economy is expanding.

As consumer spending accounts for more than two thirds of U.S. economy, the surprising large decline in consumer confidence weighed heavily on all markets. Stocks tumbled right after the report was released, and remained at low levels throughout the session.

Meanwhile, the weak consumer data plus a report about euro zone 's largest economy Germany still struggling with recession prompted investors' interest in the dollar as safe haven. The green back strengthened against the euro, sterling pound and other major currencies on Tuesday.

Weak energy consumption prospect and rising dollar sent commodities including crude and gold futures lower, which in turn dragged down energy and material stocks.

The gloomy consumer report outweighed a relatively comforting housing price report and upbeat corporate earnings.

The Standard & Poor's/Case-Shiller 20-city home price index unexpectedly declined by 0.2 percent in December. However, the annual drop slowed to 3.1 percent, nearly matching analysts' estimates that it would fall by 3.2 percent.

Meanwhile, during the last three months of 2009, the S&P/Case- Shiller Home Price Index fell just 2.5 percent compared with one year earlier, but rose 1.6 percent from the previous quarter.

In earnings front, home improvement retailer Home Depot reported a profit that beat expectations and raised its dividend and outlook. Its rival Lowe's Corp. also raised outlook in previous session.

Other major U.S. retailers including Target, Sears Holdings and Macy's all reported better-than-expected fourth quarter results.

Source: Xinhua
  • Do you have anything to say?


Special Coverage
Major headlines
Editor's Pick
  • Scenic spots to visit for Year of Tiger
  • New Yumi Katsura wedding dresses issued
  • Chinese men's curling team beats U.S. 11-5 at Vancouver Games
  • Dance freely on the ice in Vancouver Olympics
  • Skiers ski with their dancing shadows
  • Miracle: "Pocket baby" of 1kg survives!
Most Popular
Hot Forum Dicussion