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Stocks Drop: Dow Falls 115, Nasdaq Off 31

Posted on: Tuesday, 30 September 2003, 06:00 CDT

Wall Street resumed its downward slide Tuesday following disappointing reports on consumer confidence and business activity in the Midwest. The Dow Jones industrials dropped more than 100 points.

Investors have been increasingly uneasy about stock prices, fearing they've climbed too high too, too fast given the still fragile economic recovery. Wall Street interpreted Tuesday's reports as confirming its fears about the economy.

In late morning trading, the Dow was down 115.03, or 1.2 percent, at 9,265.21. The loss erased much of Monday's gain of 67.16, the first advance in four sessions.

The market's other gauges were also lower, following their first gains in four days. The Nasdaq composite index dropped 30.58, or 1.7 percent, to 1,793.98. The Standard & Poor's 500 index fell 12.48, or 1.2 percent, to 994.10.

The Conference Board reported that consumer confidence, which had rebounded in August, took a bigger than expected hit in September due to a sluggish job market. The group's Consumer Confidence Index fell to 76.8, a five-point decrease from the revised 81.7 registered in August. The reading was also well below the 80.5 economists had predicted.

Soon after, the Purchasing Management Association of Chicago said its index of area business activity fell to 51.2 in September on a seasonally adjusted basis from 58.9 in August. Economists were expecting a much smaller decrease to 57.0. The Chicago index is considered a harbinger of the national Institute for Supply Management's index, to be released on Wednesday.

Still, a reading above 50 indicates that business is growing and September marked the fifth straight month that the midwestern business barometer signaled expansion.

Wall Street was headed for a second straight winning quarter, an achievement not seen since the fourth quarter of 1999 and the first quarter of 2000. But the market was poised to end down during September, which historically is one of the weakest months for stocks.

Among the losers Tuesday, Sun Microsystems Inc. dropped 56 cents to $3.30 after Bear Stearns downgraded the computer networker to "underperform" from "peer perform."

SAFECO Corp. fell 79 cents to $33.95 after announcing it would sell its life insurance and investment management division to focus on its property-casualty insurance operations and would cut 500 jobs.

Retailing issues traded higher on a string of upgrades. The Talbots Inc. advanced 92 cents to $35.01 and AnnTaylor Stores Corp. rose 30 cents to $31.29 after SG Cowen raised each of their ratings to "outperform" from "market perform." And, bebe stores inc. climbed $2.49 to $27.56 after Wedbush Morgan raised its recommendation to "buy" from "hold."

Declining issues outnumbered advancers nearly 3 to 1 on the New York Stock Exchange. Volume was light at 426.11 million shares, but ahead of the 351.18 million exchanged at the same point Monday.

The Russell 2000 index, which tracks smaller company stocks, fell 5.96, or 1.2 percent, to 486.75.

Overseas, Japan's Nikkei stock average finished Tuesday down 0.1 percent. In afternoon trading in Europe, France's CAC-40 fell 2 percent, Britain's FTSE 100 declined 1.1 percent and Germany's DAX index shed 3.2 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

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