Share this article

print logo


The weakest consumer confidence report in 7 1/2 years sent stocks tumbling today on fears the worst is not over for the economy and that a recovery will take longer than anticipated.

At 1 p.m., the Dow Jones industrial average was down 129.60 at 9,139.90, extending the index's 275-point loss Monday.

Broader stock indicators also dropped. The Standard & Poor's 500 index was off 16.15 at 1,062.15 and the Nasdaq composite index declined 30.93 to 1,668.59.

The Conference Board's survey measured consumer confidence at 85.5 in October, well below the 97 reported the previous month and the 96 most analysts had predicted. The index compares results to its base year, 1985, when it stood at 100. The October figure is the lowest since February 1994.

The extent of the decline caught market watchers by surprise and intensified concerns that consumers would spend less and already suffering businesses would see profits diminish even more.

Consumer spending accounts for two-thirds of the economy, and many analysts believe strong spending -- not the nine interest rate cuts this year or the tax and other government stimulus packages created to stimulate growth -- has kept the economy from a recession. A dropoff, such as the one in the October numbers, threatens that.

"These numbers reflect the profound unease that many Americans feel right now because of these terror attacks and warnings and anthrax. And if you're scared, you're not going to go to a mall and go shopping and that's going to impact the level of recovery," said Charles Pradilla, chief investment strategist at SG Cowen.

"The recovery is going to occur, but what this tells us is that it's going to be much more muted even though we have . . . very low interest rates and an awful lot of fiscal stimulus out there."

Two other economic reports due out later this week will also be closely watched. Third-quarter gross domestic product is expected Wednesday. On Friday, the Labor Department releases its October employment assessment.

In trading today, Verizon fell 97 cents to $49.22 after reporting third-quarter results slightly below expectations, although the telecommunications giant attributed much of the miss to expenses related to the terrorist attacks.

Philip Morris dropped $2.11 to $47.57 after Goldman Sachs removed the stock from its recommended buy list.

Financial stocks were weak, too, reflecting worries that a prolonged recovery won't bode well for debtors or creditors. American Express fell 77 cents to $29.17.

But Procter & Gamble gained $1.20 to $72.50 on earnings that dipped slightly but were still ahead of analysts' estimates.

Exxon Mobil slipped $1.28 to $39.40, General Electric dropped 72 cents to $36.71 and Citigroup slumped $1.20 to $45.15.

CVS shed $7.63, or 24 percent, to $23.99. The second-largest U.S. drugstore chain predicted fourth-quarter earnings that are 43 percent below analysts' estimates. The company reported a 22 percent decline in third-quarter profit and said it will shut 200 stores in the first quarter next year.

Juniper Networks tumbled $1.56 to $22.44. Merrill Lynch & Co. analyst Sam Wilson said new orders for communications equipment may have declined further. He said the No. 2 maker of high-capacity computer-networking equipment will endure "flat business trends" over the next few quarters and the upgrade cycle for routers won't begin until mid-2002.

Wilson cut his rating to "neutral" from "accumulate."

Qualcomm lost $3.15 to $49.15. Credit Suisse First Boston analyst Tim Long said revenue expectations are too high for the company that licenses patents of cell phones. Long predicted fourth-quarter revenue will be flat to slightly up from the third quarter. He reduced his earnings per share estimate for the December quarter and fiscal 2002.

Solectron fell 99 cents to $12.01, extending yesterday's 11 percent decline. The maker of electronics for other companies reduced its profit and sales forecast for fiscal 2002 because of the slowing economy.

CSG Systems International dropped $7.44 to $31.76. The provider of billing services for cable television companies expects profit of $2 to $2.15 a share in 2002, below the $2.47 expected by analysts surveyed by First Call.

Odwalla surged $3.29 to $15.12 after Coca-Cola Co. agreed to buy the natural fruit drink maker for about $181 million in cash. Coca-Cola, the largest soft-drink maker, will play $15.25 a share for Odwalla, which is 29 percent above yesterday's closing price.

There are no comments - be the first to comment