- The Washington Times - Tuesday, July 29, 2003

NEW YORK (AP) — An unexpected and sharp decline in consumer confidence jolted Wall Street yesterday, sending stocks lower on investor fears of a stumbling economy in the months ahead.

Analysts said investors were disappointed but largely willing to wait for other economic reports this week before selling off too aggressively.

“This is a heavy week for statistics and…these numbers are critical to breaking out of our current trading range,” said Janet Engels, senior vice president and director of Private Client research group at RBC Dain Rauscher.

“To me, the consumer confidence is a bad start, which might suggest we break out on the low end if the data points are as disappointing as today’s were,” she said.

The Dow Jones industrial average closed down 62.05, or 0.7 percent, at 9,204.46. Earlier in the day, the blue chips fell as much as 98 points.

The broader market also finished lower. The Nasdaq Composite Index lost 3.99, or 0.2 percent, to 1,731.37. The Standard & Poor’s 500 Index fell 7.24, or 0.7 percent, to 989.28.

The Conference Board reported that its consumer confidence index slid to 76.6 this month from 83.5 in the previous month, amid jitters about rising unemployment. Analysts had expected a reading of 85.0. The index is closely watched because consumer spending accounts for about two-thirds of the domestic economy.

“Consumer confidence came out and took the steam out of everything,” said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm. “It all boils down to concerns about unemployment.”

“We are a consumer-driven economy, and if they can’t find jobs, they can’t spend,” he said.

Rumors that U.S. forces had captured Saddam Hussein helped minimize losses. In Iraq, U.S. forces arrested a bodyguard who is thought to have rarely left Saddam Hussein’s side, feeding speculation on Wall Street that the ousted dictator was in custody. The Dow rose as much as 23 points before losing momentum in the late afternoon.

While stocks have rallied in recent months, investors are now looking for evidence that the economy is firmly on track. Several reports due out this week, including on the gross domestic product tomorrow and employment on Friday, are expected to give the market a clearer direction after weeks of choppy trading.

“The employment data on Friday will be a biggie,” Mr. Dunay said. “A lot of economic data is showing improvement, and earnings are not bad, but you can’t have unemployment continuing to move up without it starting to be a big problem for the economy.”

Tyco International fell 75 cents to $19 after the manufacturing conglomerate swung to a profit in its fiscal third quarter compared with a loss a year ago.

DuPont declined 42 cents to $43.97 after the chemical giant reported a jump in second-quarter earnings that handily beat Wall Street’s expectations.

Gainers included McDonald’s, which rose 89 cents to $22.15, after the fast-food chain reported quarterly earnings in line with analysts’ estimates.

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