Consumers’ Weak Confidence Sends Markets Reeling

Stock prices tumbled anew Tuesday after a report of declining consumer confidence spooked investors who had been betting on an economic turnaround.

The news also sent Treasury bond yields sliding.

On Wall Street, the Dow industrials lost 160.32 points, or 1.5%, to 10,222.03. Coupled with Monday’s slide of 40.82 points, the Dow has surrendered all of the 194-point rally it enjoyed Friday, when share prices zoomed on hopes the economy was improving.

The Nasdaq composite index fell 47.43 points, or 2.5%, to 1,864.98 on Tuesday. The index lost 4.39 points on Monday. Nasdaq had soared nearly 74 points on Friday.

The confidence report from the Conference Board upset investors because consumer spending has been one of the few bright spots in the economy.

“The consumer is the glue that is holding things together,” said Jon Brorson, director of equities at Northern Trust. The fear on Wall Street is that Americans will “get really afraid and hibernate and really send the economy south,” he said.

Losers outnumbered winners by 3 to 2 on the New York Stock Exchange and by 23 to 13 on Nasdaq. But trading volume remained muted, analysts noted--indicating there is no major rush to sell, but rather a simple lack of bidding.

“Buyers simply have no sense of urgency to commit in the current, uncertain environment. They know they are going into a bleak [corporate] earnings period in the third quarter, and the earnings [warnings] are going to come right after Labor Day,” said Bill Barker, investment consultant for brokerage Dain Rauscher. “There is no good news to offset the lack of buying enthusiasm.”

Some traders are concerned about the Commerce Department’s report due today on the economy’s growth rate in the second quarter. If the report is revised to show an actual contraction in the economy, it could fuel more fear that the economic slowdown has become a full-fledged recession.

As stocks fell Tuesday, some investors turned to the bond market, locking in Treasury yields that are near three-year lows.

The yield on the five-year T-note slid to 4.41% from 4.49% on Monday. It has dropped from nearly 5% at the end of June.

Investors are unlikely to sell Treasuries until they see “some signs of economic rebound,” Jeff Given, who helps manage $10 billion of bonds at John Hancock Funds in Boston, told Bloomberg News.

Stocks were weak worldwide Tuesday. In Japan the Nikkei-225 index fell 0.8% to 11,189.40, just above a 17-year low. Early today the Nikkei was off 1.3% to 11,049, threatening to fall below 11,000 for the first time since late 1984.

The German market fell 1.8% and the Mexican market lost 1.5%.

Among Tuesday’s highlights:

* Blue chips falling sharply included Procter & Gamble, down $1.85 to $74.99; and Boeing, down $1.41 to $51.65.

Many retail issues fell on concerns about consumer spending. Home Depot lost $1.05 to $47.90. Nordstrom slid 42 cents to $19.95.

* In the tech sector Sun Microsystems fell 94 cents to $13.56 after Goldman Sachs reduced its fiscal 2002 earnings estimate for Sun to 28 cents a share from 37 cents, citing the weak economy.

Software giant Oracle lost 92 cents to $14.01 on news that a senior sales executive is taking a leave of absence.

Other tech shares falling included Microsoft, down $1.57 to $60.74, and Alcatel, down $1.15 to $16.45.

* Brokerage stocks were weak, led by Merrill Lynch, down $1.43 to $52.67, and Charles Schwab, down 70 cents to $12.31.

* Some thrift stocks gained after falling sharply in recent sessions. Washington Mutual added 83 cents to $37.08; Downey Financial rose 86 cents to $47.76.

Market Roundup, C6, C7