NEW YORK, July 1 — 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, in Savannah, Georgia.
“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 per 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.
2nd quarter’s double-digit gains 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 per cent 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 per cent or about US$1.5 trillion (RM5.3 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 March 9, the S&P 500 is up 35.9 per cent.
Among industrial stocks, shares of Caterpillar Inc, a maker of bulldozers and excavators, slumped 4.9 per cent to US$33.04, while on the technology front, International Business Machines Corp tumbled 1.3 per cent to US$104.42.
On Nasdaq, chip maker Qualcomm, off 1.9 per cent at US$45.20, was the worst drag.
Oil sector hits a speed bump Sliding oil prices gave investors a reason to sell some energy shares, with Exxon Mobil down almost 1 per cent at US$69.91.
Crude oil futures fell US$1.60, or 2.2 per cent, to settle at US$69.89 a barrel.
Shares of US oil refiners such as Sunoco Inc and Tesoro Corp dropped after Goldman Sachs cut them to “sell” from “neutral”. Sunoco dipped 0.4 per cent to US$23.20, while Tesoro declined 1.2 per cent to US$12.73.
On the final day of the second quarter, money managers set out to burnish their portfolios by selling losing stocks and scooping up winners in a move that helped the market end sharply off its lows.
Volume was on the lighter side due to a holiday- shortened week. US markets will be shut for the US Independence Day holiday on Friday.
Yesterday’s other economic news were separate reports that showed US single-family home prices fell in April but the pace of decline moderated, and business activity in the Midwest contracted again in June, but at a less severe rate than expected.
On the New York Stock Exchange (NYSE), about 1.33 billion shares changed hands, below last year’s estimated daily average of 1.49 billion, while on the Nasdaq, about 2.13 billion shares traded, below last year’s daily average of 2.28 billion.
Declining stocks outnumbered advancing ones by a ratio of about five to four on both the NYSE and the Nasdaq. — Reuters
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