While you were sleeping: US consumer confidence dips, stocks slip

Monday 17th August 2009

US consumer confidence unexpectedly dropped this month, figures on Friday showed, dimming the prospects for spending to help quickly lift the world’s biggest economy out of recession. Stocks on Wall Street fell and Treasuries rose.

The Reuters/University of Michigan preliminary index of consumer sentiment fell to 63.2 this month from 66 in July. Separate figures from the Labor Department showed the consumer price index was unchanged in July from June, as expected, and fell 2.1% from the same month of 2008. Core inflation, which excludes food and energy items, rose 0.1%.

The Standard & Poor’s 500 Index fell 0.9% to 1,004.09 on Friday. The Dow Jones Industrial Average fell 0.8% to 9321.40. The Nasdaq Composite declined .2% to 1985.52.

Boeing Co. dropped 3.8% to US$44.87, leading the Dow lower. Aluminium producer Alcoa Inc. fell 3.2% to US$13.27 as metal prices weakened.

Best Buy Co. dropped 8.3% to US$36.44 after Goldman Sachs Group said earnings at the world’s biggest electronics chain may be hurt by increased competition.

US Treasuries rose after the consumer price index showed inflation is benign. The yield on the 10-year notes fell 3 basis points to 3.57%.

Industrial production rose in July, according to Federal Reserve figures. Output rose 0.5% last month, after declining 0.4% in June.

Colonial BancGroup Inc., the lender based in Alabama, had its banking operations taken over by BB&T Corp. in what Bloomberg reported as the biggest collapse since Washington Mutual’s failure last year.

The arrangements were brokered by the Federal Deposit Insurance Corp., which said Colonial, which is also facing a criminal investigation, had assets of US$25 billion and deposits of US$20 billion.

The US dollar weakened 0.5% to 94.91 yen on Friday in New York and the euro fell 1% to 134.80 yen after the weaker consumer confidence figures in the U.S. stokes risk aversion. The euro slipped 0.5% to $1.4202.

Gold fell as the dollar strengthened against the euro, reducing the demand for the precious metal as an alternative investment.

Gold futures for December delivery slipped 0.8% to US$948.70 an ounce on the New York Mercantile Exchange on Friday.

Crude oil for September delivery fell about US$3 to $67.50 a barrel on the New York Mercantile Exchange, the lowest since July 30.

Copper fell after inventories monitored by the London Metal Exchange rose. Copper for December delivery fell 2.7% to US$2.8510 a pound on the New York Mercantile Exchange.

European consumer prices fell more than initially estimated last month, reflecting soaring unemployment and weaker energy costs.

Prices in the euro region fell by a record 0.7% from the same month of 2008, according to the European Union statistics.

Shares fell in Europe. The Dow Jones Stoxx 600 declined 0.7% to 228.77. Volkswagen declined 16% and Peugeot SA fell 3.7%. Renault declined 5.2%.

The UK’s FTSE 100 fell 0.9% to 4713.97 and Germany’s DAX 30 dropped 1.7% to 5309.11. France’s CAC 40 declined 0.8% to 3495.27.

Businesswire.co.nz

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