While you were sleeping: US consumer confidence dips, Wall St falls

Wednesday 1st July 2009

Stocks on Wall Street fell after consumer confidence fell and figures showed an increase in defaulted home loans, fueling concern the world’s biggest economy won’t recover quickly.

Heavy earth-moving equipment maker Caterpillar Inc. fell 4.9% to US$33.04, leading the Dow Jones Industrial Average lower. Consumer goods manufacturer Procter & Gamble Co. declined 2.2% to US$51.10.

The Dow shed 1% to 8447.00 and the Standard & Poor’s 500 declined 0.9% to 919.32. The Nasdaq Composite fell 0.5% to 1835.04.

Consumer confidence unexpectedly slipped to 49.3 last month, from a revised 54.8 in May, according to the Conference Board’s sentiment index while government figures showed the least risky home loans, prime mortgages, which were 60 days overdue rose 2.9% in the first quarter.

The Chicago Board Options Exchange Volatility Index, or VIX, jumped 6.2% to 26.91, having touched the lowest since before the collapse of Lehman Brothers in September the previous day.

American International Group Inc. tumbled 13% to US$1.16, leading the S&P 500 lower, after saying the risk of losses on derivatives may last longer than it had expected.

AIG has an “excellent chance” of repaying the government, which provided US$182.5 billion in aid to prevent the insurance group’s collapse, chief executive Edward Liddy told shareholders at their annual meeting.

Exxon Mobil dropped 1% to US$69.91 as crude oil declined.

Real-estate values in the 20 largest U.S. cities fell 18% in April from a year earlier, the smallest slide in six months, according to the S&P/Case-Shiller index.

A new consumer finance agency would have widespread powers to enforce tough consumer protection rules for banks, mortgage lenders and other financial firms under proposed legislation that’s been sent to the Congress.

The proposed Consumer Financial Protection Agency strengthens aims to protect Americans from poor credit practices including so-called fee traps, unfair interest rate increases, weak loan disclosures and deceptive mortgage lending.

"Consumer protection will have an independent seat at the table in our regulatory system," U.S. Treasury Secretary Timothy Geithner said.

The U.S. dollar gained against the euro as the consumer confidence drop dimmed hopes of an early economic recovery in the U.S.

The greenback strengthened to $1.4039 against the euro from $1.4083 and gained to 96.29 yen from 96.06. The euro traded at 135.18 yen from 135.31.

The Dollar Index, which tracks the dollar against the currencies of six major trading partners rose 0.3% to 80.14.

Gold fell as the dollar’s advance eroded demand for the precious metal as an alternative investment.

Gold futures for August delivery fell 1.4% to US$927.40 an ounce on the New York Mercantile Exchange.

Crude oil fell from an eight-month high as the decline in U.S. consumer confidence stoked concern demand for fuel will be weaker. Crude for August delivery dropped 2.3% to US$69.85 a barrel in New York.

Copper futures for September delivery fell 1.8% to US$2.285 a pound on the New York Mercantile Exchange.

The U.K. economy shrank 2.4% in the first quarter, the biggest contraction since 1958, according to the Office for National Statistics. Gross domestic product fell more than the previously estimated 1.9%, helping drive U.K. stocks lower.

The FTSE 100 Index declined 1% to 4249.21. Rio Tinto Group shed 2.2% and Anglo American Plc fell 2.7% as prices of metals dropped.

Lloyds Banking Group slipped 0.9% after announcing plans to cut 2,100 jobs in its wholesale business and to strip out duplicate roles since the takeover of HBOS in January. The latest cuts will bring jobs losses since the transaction to 7,000.

Europe’s Dow Jones Stoxx 600 Index slid 1.1% to 205.83, driven lower by signs of weaker economic activity in the U.S.

Total SA shed 1.3% and Royal Dutch Shell Plc declined 1.2 percent as the price of crude oil fell.

KBC Group NV fell 3.7% after the European Union said it would investigate Belgian government guarantees.

France’s CAC 40 fell 1.7% to 3140.44 and Germany’s DAX 30 fell 1.6% to 4808.64.

Businesswire.co.nz

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