World Business

Wall St dives on weak consumer sentiment

(Agencies)
Updated: 2010-07-17 15:20

NEW YORK - Dismal consumer sentiment data and anemic revenues from GE and two big banks slammed US stocks on Friday, driving down major indexes more than 2 percent.

The slide in the S&P 500 was a decisive break of an 8 percent rise over the last two weeks as investors lost hope that strong earnings could overcome doubts about the economic outlook.

"Economic recoveries rarely go smoothly," said Gail Dudack, chief investment strategist at Dudack Research Group in New York.

"They're very sensitive to anything that helps or hurts confidence, on the corporate side and the consumer side."

General Electric Co, Bank of America Corp and Citigroup Inc joined the list of major companies that beat Wall Street's expectations, but investors unloaded some shares of all three after the companies reported a drop in quarterly revenues.

"The next step for earnings has to be top line or revenues, and revenues slowed down along with the consumer and the economy in the second quarter," Dudack said.

Related readings:  US federal deficit tops $1t  US trade deficit rises to $42.3b in May  US Senate passes historic financial overhaul  US dollar falls to 7-month low against Japanese yen

Bank of America, the biggest US bank, slid more than 9 percent and the S&P financial index dropped 4.4 percent as investors fretted about how banks will make money going forward.

The Dow Jones industrial average dropped 261.41 points, or 2.52 percent, to 10,097.90. The Standard & Poor's 500 Index slid 31.60 points, or 2.88 percent, to 1,064.88. The Nasdaq Composite Index lost 70.03 points, or 3.11 percent, to 2,179.05.

Volume picked up late in the day after waning since the beginning of July.

For the week, the Dow fell 1 percent, while the S&P 500 dropped 1.2 percent and the Nasdaq gave up 0.8 percent.

During Friday's session, GE's stock fell 4.6 percent to $14.55, while Citigroup lost 6.3 percent to $3.90. Bank of America was down 9.2 percent at $13.98.

Weak energy costs pushed consumer prices down for a third straight month in June, US government data showed. That report and the Thomson Reuters/University of Michigan data were the latest in a string of economic indicators showing the pace of the recovery is slowing.

GOOGLE AND GILEAD STUMBLE

Google Inc shares also sagged after the company missed profit expectations for the first time in two years. The stock was down 7 percent at $459.61.

Among the Nasdaq's other leading decliners, Gilead Sciences Inc tumbled 8.5 percent to $31.94 after Jefferies cut its price target on the stock to $38.00 from $48.00.

The Thomson Reuters/University of Michigan survey of consumers showed US consumer sentiment fell far more than expected to 66.5 in a preliminary July reading, down sharply from 76.0, June's final number. Earlier, the US Labor Department reported the US Consumer Price Index dipped 0.1 percent in June, which was weaker than the forecast for no change.

The S&P's consumer discretionary sector was among the biggest losers; the sector's index fell 3.5 percent.

About 9.35 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, just below last year's estimated daily average of 9.65 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 4 to 1, while on the Nasdaq, more than seven stocks fell for every one that rose.