Consumers remain shy on US economy
US STOCKS fell yesterday as an unexpected drop in consumer confidence cooled recent optimism about an economic recovery, but Wall Street still closed out its best quarter in a decade.
The drop in the Conference Board’s measure of consumer confidence in June suggested that the 18-month-long recession had yet to loosen its grip on the US economy.
Gloom among consumers is a major obstacle as their spending is a major driver of corporate profits and accounts for roughly two-thirds of US economic activity.
Yesterday’s standout decliners included industrials, energy, financials and material stocks, some of the very same sectors that helped underpin the market’s push to recover from the 12-year lows of early March as investors bet on economic stabilisation.
“Consumer confidence is the excuse du jour for the latest market move,” said Tom Alexander, head of Alexander Trading.
“For the market to go much higher, you are going to have to see some real hard evidence of some of these things that are being anticipated by the market start to come to fruition. Pick one. Are the bank balance sheets really cleaned up? Nobody knows. The market has gone up on a lot of faith here.”
The Dow Jones industrial average slipped 82.38 points, or 0.97 pe r cent, to 8,447.00. The Standard & Poor’s 500 Index dropped 7.91 points, or 0.85 per cent, to 919.32. The Nasdaq Composite Index shed 9.02 points, or 0.49 per cent, to 1,835.04.
Even so, the S&P 500 posted its best quarterly performance since the fourth quarter of 1998. The benchmark S&P 500 jumped 15.2 per cent in the second quarter, while the blue-chip Dow average advanced 11 percent and the Nasdaq shot up 20.1 per cent.
For the quarter, the Wilshire 5000 – the broadest measure of publicly traded US companies – is up 16.21 percent or about $1.5 trillion.
For the month of June, the Dow shed 0.6 per cent, while the S&P 500 inched up 0.02 per cent, and the Nasdaq climbed 3.4 per cent.
Since its 12-year closing low on 9 March, the S&P 500 is up 35.9 per cent.