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Wednesday, December 01, 2004 - Page updated at 12:00 A.M.
STOCK QUOTES      More market data...

Markets
Shares dip as consumer-confidence falls

By MEG RICHARDS
The Associated Press

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NEW YORK — Stocks sagged yesterday as sliding consumer confidence trumped the latest report on the nation's gross domestic product (GDP), which grew at a faster pace than expected. Still, the major indexes ended November with their best monthly performance for the year.

The Dow Jones industrial average was down 47.88 to 10,428.02, slipping back into negative range for the year.

Microsoft, one of the 30 Dow stocks, added 4 cents to close at $26.81 a share. Boeing, also a Dow stock, fell 5 cents to $53.57.

The broader gauges were also lower. The Standard & Poor's 500 index shed 4.75 to 1,173.82. The Nasdaq composite index fell 10.06 to 2,096.81.

After a modest opening weekend to the holiday shopping season, a fourth straight monthly decline in consumer confidence was the last thing investors wanted to see. But analysts weren't overly alarmed by the selling, noting that it seemed relatively controlled and was typical of the sort of pause stocks often see after Thanksgiving and ahead of the seasonally strong month of December.

The latest reading on economic growth was a significant pickup over the second quarter's 3.3 percent pace. GDP, which measures the value of all goods and services produced within the United States, is considered the broadest measure of the economy's health. Some analysts say the economy will expand slightly faster than 4 percent in the current quarter.

But consumer sentiment didn't match the bullish GDP data. The Conference Board's index of consumer confidence registered a fourth consecutive decline, reflecting doubts about the economy in the months ahead. The index fell to 90.5 from a revised reading of 92.9 in October; analysts expected a reading of 96.0 last month.

Economists keep a close watch on consumer-confidence measures because consumer spending accounts for two-thirds of all U.S. economic activity.

"We don't like to see consumer confidence reduced as we go into the Christmas holiday season, but going by what we saw from sales over the weekend, we think sales will be pretty good," said Alfred Goldman, chief market strategist with A.G. Edwards & Sons.
 
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Despite the day's lackluster trading, November turned out to be a great month for stocks, with the Dow posting a 3.99 percent advance, the S&P adding 3.86 percent and the Nasdaq surging 6.17 percent. It was the best monthly gain of the year for all three indexes.

Brisk consumer and business spending helped the nation's GDP grow at an annual rate of 3.9 percent during the third quarter, stronger than previously thought. U.S. exports, buoyed by a weaker dollar, also contributed to the overall economic growth.

Analysts are also keeping an eye on the impact high energy prices are having on economic activity. Oil prices hit a record high of just over $55 a barrel in late October, but have hovered near the $50 range recently. Crude futures slid 63 cents to settle at $49.13 per barrel on the New York Mercantile Exchange.

"The benchmark now for most people is $50 a barrel ... that's the world we're living in today," said Thomas Lydon Jr., president of Global Trends Investments. "As long as oil is under that benchmark, I think most people on Wall Street are pretty comfortable."

Copyright © 2004 The Seattle Times Company

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