- The Washington Times - Wednesday, October 30, 2002

NEW YORK (AP) An unexpected plunge in consumer confidence incited another wave of profit-taking on Wall Street yesterday, but stocks recovered by late in the session, and renewed buying offset some of the losses.
The Dow Jones Industrial Average eked out a slim gain, while the rest of the market posted moderate declines, bouncing back from a sharp downturn.
Analysts said the market was pressured more by the temptation to secure gains rather than increased skepticism about the economy or the market. Investors already were inclined to collect some of their winnings in recent sessions after a surprisingly strong three-week rally.
"It is just an excuse to take some profits. There is nothing new here. We all knew consumers were worrying about the decline in the stock market and the geopolitical situation," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
After falling as much as 170 points early in the session, the Dow closed up 0.90 at 8,368.94. On Monday, the Dow lost 75 points to profit taking.
The market's broader gauges pulled back. The Nasdaq Composite Index fell 15.29, or 1.2 percent, to 1,300.54. The Standard & Poor's 500 index declined 8.08, or 0.9 percent, to 882.15.
Investors were disappointed by a sharp decrease in consumer confidence. The Conference Board reported that confidence fell to 79.4 in October, the weakest level since 1993 and far below the reading of 90 analysts were expecting.
Analysts were somewhat concerned that the slide in consumer confidence would prompt Federal Reserve policy-makers to lower interest rates when they meet next week. While rate cuts typically cause the market to rally for a time, their effect has diminished after last year's 11 reductions that so far have failed to restart the economy.
"We are at a point where we'd like to see the Fed tighten [rates] to indicate that the economy has turned," said Matt Brown, head of equity management at Wilmington Trust.
Consumer sentiment is closely monitored by Wall Street because consumer spending accounts for two-thirds of the economy. Likewise, some consumer cyclical stocks were among Wall Street's losers in yesterday's session.
General Motors fell $1.15 to $33.73 and appliance maker Maytag declined 42 cents to $25.06.
But Procter & Gamble rose $3.26 to $89.01 and Estee Lauder advanced $1.70 to $29.06 after each company posted third-quarter earnings that beat analysts' expectations by 2 cents a share.
The market was due for some pullback after a series of strong rallies beginning Oct. 9. Since that time, the Dow and S&P; 500 each have climbed nearly 15 percent, while the Nasdaq has jumped 18 percent.
Analysts didn't expect the consumer news to totally derail the market's recent progress, which has been based on better-than-expected third-quarter earnings.
"It is hard to think that consumers are that pessimistic when home sales are still strong. And, when you give a good bargain, even cars get sold," Mr. Cardillo said.
The Russell 2000 index, the barometer of smaller company stocks, fell 0.38, or 0.1 percent, to 368.63.
Declining issues outnumbered advancers 9 to 5 on the New York Stock Exchange. Trading volume was moderate.
Overseas, Japan's Nikkei stock average finished yesterday down 0.6 percent. In Europe, France's CAC-40 dropped 5 percent, Britain's FTSE 100 fell 3.8 percent, and Germany's DAX index sank 5.5 percent.

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