Stocks Fall Along With Consumer Confidence, Factory Output
NEW YORK (MarketWatch) -- U.S. stocks on Friday continued a two-day slump, dragged down by declines in both U.S. consumer confidence as well as factory activity in the New York region, while a lowered forecast from Best Buy Co., the nation's largest electronics retailer, added to the negative tone.
"There were two ugly numbers reported this morning" said Phil Orlando, equity market strategist at Federated Investors.
The New York Federal Reserve's Empire manufacturing number "fell off a cliff, and is reminiscent of the Philly Fed number we saw a few weeks ago, meaning two of the regional manufacturing numbers were just dreadful," said Orlando.
And, "the Michigan confidence number was well below what was expected and what the January reading was," said Orlando, who chalked up the move lower to "those two bad numbers on top of a generally sloppy tone of the market."
The Dow Jones Industrial Average fell 84.7 points to 12,292.3, with 23 of its 30 components trading lower. The decline was fronted by Citigroup Inc. , down 2.3%.
The S&P 500 dropped 6.75 points to 1,342.11, while the Nasdaq Composite declined 21.36 points to 2,311.18.
Underlying the market's negative tone, Best Buy Co. lowered its 2008 forecast, with the Minneapolis-based electronics retailer citing soft customer traffic in January. The company's stock was recently off 3.5%. .
Best Buy's profit warning pressured retail stocks, with the S&P Retail Index down 0.9% in recent action.
"They rally we saw in financials and consumer discretionary was more short covering than anything else; those sectors have not yet found a bottom," said Orlando.
That said, absent those two sectors, other market categories are in "pretty good shape," said Orlando. "On balance, earnings are down about 20% for the fourth quarter, yet, when you strip out financial services writeoffs and consumer discretionary writeoffs, earnings are positive 10% to 15%."
In commodities trading, gold futures ended lower, while platinum futures extended their record-breaking run. .
Crude-oil futures advanced 14 cents to $95.60 a barrel. .
Volume on the New York Stock Exchange topped 970 million, while more than 1.3 billion shares traded on the Nasdaq. Declining stocks ran ahead of those gaining by more than 2 to 1 on both exchanges.
Down data
Ahead of the opening bell, the Labor Department said the cost of goods imported into the country climbed 1.7% in January, powered largely by rising energy prices. .
"The report suggests that the dollar depreciation is increasingly a worry with regard to the inflation outlook," said Matus.
The Federal Reserve of New York's Empire State Manufacturing Survey pointed to declining conditions this month, with the gauge falling nearly 21 points to stand at a negative 11.7, its first drop into the red since May 2005 and far worse than the fall that analysts predicted. .
Having less of an impact on the equities market was word from the Federal Reserve that U.S. industrial production climbed 1% in January, matching the expectations of economists surveyed by MarketWatch.
A survey released by the University of Michigan and Reuters had consumer sentiment darkening further in February, with an index falling to 69.6 mid-month from 78.4 in January. .
"Serious headwinds in the economy and the financial markets continue to take a toll on sentiment, although it's not yet translated to a collapse in consumer spending," said analysts at Action Economics.
In Europe, stocks turned sharply lower amid concern about the health of banks, along with the poor U.S. economic data. .
Treasury bonds rose, putting yields under pressure, as investors fled to the safety of government debt on rekindled worries about the U.S. economy and the credit markets.
By Kate Gibson