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Drop in consumer confidence sends stocks lower

Drop in consumer confidence sends stocks lower

A report showing Americans are still downbeat on the economy is giving investors reason to sell stocks.
The market failed to hold on to early gains and edged lower in midday trading Tuesday after the Conference Board said its consumer confidence index fell to 53.1 in September, down from 54.5 in August and much lower than the reading of 57 that economists had been expecting.
The private research group attributed the decline to concerns about the labor market, saying consumers are still worried about losing their jobs. Consumer confidence has been a key focus for the stock market in recent months, and many analysts say a true turnaround in the economy can't occur until consumers start spending again and employers create more jobs.
The disappointing report was tempered by an increase in home prices, the latest encouraging sign for the troubled housing sector. The Standard & Poor's/Case-Shiller home price index of 20 major cities showed home prices rising 1.2 percent in July from June, marking the third straight month of increases.
The stock market has zigzagged in recent days as mixed signals on the economy have many investors believing that any recovery will be fitful at best. With the benchmark Standard & Poor's 500 index up 57.1 percent since hitting a 12-year low in March, analysts say investors are using the mixed data as an excuse to sell some of their holdings.
"The market's a little skittish," said Howard Ward, portfolio manager at GAMCO Growth Fund. "The data is inconsistent, so there will be the occasional economic release that is going to trigger some selling because stocks are up a lot."
At midday, the Dow Jones industrials fell 32.12, or 0.3 percent, to 9,757.24. The Standard & Poor's 500 index fell 2.93, or 0.3 percent, to 1,060.05, and the Nasdaq composite index fell 12.02, or 0.6 percent, to 2,118.72.
About four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 475.3 million shares, compared with 343.3 million shares traded at the same time on Monday.
In other trading, the Russell 2000 index of smaller companies fell 2.75, or 0.5 percent, to 610.47.
Stocks jumped Monday, breaking a three-day losing streak, as news of large takeovers by Xerox Corp. and Abbott Laboratories brought hope that corporate dealmaking could be making a comeback. That would be a big positive not only for the economy but also for the stock market as investors try to figure out which companies could become acquisition targets.
Analysts have been saying that some pullback in stocks is healthy considering how far and how fast the market has risen. But so far, any breaks in the advance have been fairly mild and brief, as investors who don't want to miss an opportunity to join in the market's climb higher keep the momentum going.
Still, the market could sell off more if reports continue to fall short of expectations. Despite better signs on manufacturing and home sales, the labor market remains beaten down. Investors will get the latest news on employment on Friday when the Labor Department releases its monthly jobs report, one of the most closely watched economic reports on the calendar.
Oil prices continued their decline Tuesday on the growing belief that the U.S. economy won't be strong enough to lift demand as much as expected. Oil had been steadily rising in recent months on expectations that the economy was going to be stronger, therefore pushing demand higher.
Meanwhile, bond prices mostly fell after five days of gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.30 percent from 3.28 percent late Monday.


Updated : 2021-10-20 17:24 GMT+08:00