- The Washington Times - Wednesday, May 29, 2002

NEW YORK (AP) Weaker-than-expected consumer confidence and spending figures sent stocks tumbling yesterday as investors grew concerned that the economic recovery was slowing. The Dow Jones Industrial Average posted its second straight triple-digit decline.
Light trading, the result of many investors extending their Memorial Day vacations, also made the market susceptible to extreme losses or gains.
The Dow closed down 122.68, or 1.2 percent, at 9,981.58, according to preliminary calculations. It was the Dow's first close below 10,000 since May 10, and followed a 111-point drop Friday.
Broader stock indicators also retreated. The Nasdaq Composite Index slid 9.32, or 0.6 percent, to 1,652.17. The Standard & Poor's 500 Index fell 9.27, or 0.9 percent, to 1,074.55.
Wall Street got off to a negative start early in the session on consumer data that showed improvement, but not as much strength as investors had anticipated.
"It wasn't bad economic data, it just didn't surprise us on the upside," said John Forelli, portfolio manager for Independence Investment LLC. "The market needs good news to make it go forward, and there's just a dearth of good news right now."
The Conference Board reported yesterday that consumer confidence rose in May to 109.8 from a revised 108.5 in April. Analysts had expected a reading of 110.0 from the survey conducted by the business group.
The figures were similar to a Commerce Department report for April, which showed incomes rising by 0.3 percent and consumer spending up 0.5 percent. The income figure was in line with analyst forecasts, but consumer spending was a little lower than expected.
Critical research reports about bellwethers and Dow components Home Depot and Intel intensified the decline.
Home Depot dropped $1.88 to $41.54 after UBS Warburg downgraded the stock to "hold" from "buy," citing concerns about its business strategy.
The selling spread to other retail stocks, including Wal-Mart, which fell 73 cents to $54.79.
Among technology stocks, Intel lost 31 cents, falling to $28.35 after Merrill Lynch reduced its earnings estimates for the chip-maker, citing soft revenues.
Personal-computer makers, which depend heavily on consumer spending, were especially vulnerable. Gateway fell 11 cents to $5.57, while Dell slipped 37 cents to $26.85.
But Dynegy soared 39 cents to $9.69 after the energy marketer's top executive resigned because of problems including a decline of as much as 88 percent in its stock value from the year's high.
And Halliburton rose 25 cents to $19.35 in the wake of news the oil-services company has settled 30 asbestos-exposure lawsuits. Concern about the costs of asbestos-related litigation has weighed the stock down for months.


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