Consumer confidence in February slumped to a 10-month low as the short-term outlook on jobs worsened. Results from retailers added little hope, as bellwethers like Target forecast a tepid performance in the first quarter.
Stocks associated with a strong cyclical upturn in the economy were hit. Top performers during last year’s rally, including technology, materials and energy stocks led the downside. Oil futures fell $1.45 to $78.86 a barrel, pulling the S&P energy index down by 1.5 per cent. Dow component Caterpillar shed 2.4 percent to $56.66.
Chipmaker Intel dropped 2.4 per cent to $20.38 and the PHLX semiconductor index lost 2.8 per cent.
The Dow Jones industrial average slipped 100.97 points, or 0.97 percent, to 10,282.41. The Standard & Poor’s 500 Index gave up 13.41 points, or 1.21 per cent, at 1,094.60. The Nasdaq Composite Index was off 28.59 points, or 1.28 per cent, to 2,213.44.
Nearly 8.48bn shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65bn.
Declining stocks outnumbered advancing ones on the NYSE by 2,113 to 939, while on the Nasdaq, decliners beat advancers by 1,759 to 875.
Overseas data set a negative tone early on with German business confidence falling unexpectedly for the first time in almost a year. The day’s losses reversed stocks’ recent trend and the S&P 500 racked up its worst decline since early February.
The broad index had risen in four of the past five trading days and posted weekly gains in the last two weeks.
Investors shied away from risk ahead of Bernanke’s testimony when he is likely to be asked about the Fed’s surprise move to raise the discount rate last week.
Home Depot was a bright spot, reporting results that beat estimates and raising its profit forecast. The Dow component gained 1.4 per cent to $30.75.
But discount retailer Target fell 1.2 per cent to $50.06 after it gave a tepid view of its first-quarter outlook even as it posted a fourth-quarter profit slightly above expectations.
Meanwhile, a separate report showed home prices unexpectedly slipped in December, adding to concerns over the sustainability of the economic recovery.