Consumer spending fears push Dow lower
Disappointing earnings from electronics retailer Best Buy Co. Inc. sent stocks falling today as investors feared lackluster consumer spending that would weaken the overall economy.
According to preliminary calculations, the Dow Jones industrial average fell 85.5, or 0.80%, to 10,597.44.
Best Buy’s profits, which rose 25% from a year ago, missed Wall Street’s forecasts, and the company said the current quarter also would miss targets, heightening investors’ concerns that high gasoline and heating oil prices will hurt consumers.
A rise in crude oil also pressured stocks. A barrel of light crude was quoted at US$63.23 (€51.57), up 12 cents, on the New York Mercantile Exchange.
The retail news overshadowed a slightly better-than-expected report on wholesale inflation.
The Labour Department’s Producer Price Index rose 0.6% in August, less than the 0.7% expected. With costly fuel prices removed, “core” PPI was flat for the month.
“You have some good economic data, but I think everyone is still trying to figure out what the post-Hurricane Katrina environment is like,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co.
“For now, the fundamentals look strong, but that could change in the next few months as the distortions caused by Katrina come through in the economic data, and that’s what has people holding off.”
Broader stock indicators also lost ground. The Standard & Poor’s 500 index dropped 9.36, or 0.75%, to 1,231.20, and the Nasdaq composite index slid 11.08, or 0.51%, to 2,171.75.
