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U.S. consumer confidence falls to 2-year low

Associated Press
August 30, 2011
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Stocks fell Tuesday morning after consumer confidence dropped to the lowest level since April 2009. Retailers and other companies that depend on consumer spending had the steepest losses.

The drop in the Conference Board's Consumer Confidence Index was far worse than analysts expected and only half of the level that indicates a healthy economy. The index plunged 15 points, to 44.5, in August, well below the estimate of 53.3 from economists surveyed by FactSet. The index is usually at 90 or above when the economy is strong.

The sharp fall in the measure of how U.S. consumers feel about the economy could mean weaker sales for retailers and makers of consumer goods like clothes and shoes. Retailers are in the midst of the critical back-to-school shopping season, which can account for as much as 25 percent of their annual revenue.

The Dow Jones industrial average was down 35 points in early trading, then fell 109 points five minutes after the report came out at 10 a.m. By 10:45 a.m. it was down 76 points, or 0.7 percent, at 11,463.

Companies that rely most heavily on consumer spending fell more than the broader market. Retailer Kohl's Corp. fell 2.5 percent, Nike Inc. fell 1.7 percent and Target Corp. fell 1.4 percent.

Boeing Co. rose 1.3 percent, the most of any company in the Dow, after the aircraft giant said it received approval from its board to build a version of its workhorse 737 jet with a redesigned engine. That should help it better compete with rival Airbus.

The Standard & Poor's 500 fell 11, or 0.9 percent, at 1,199. The NASDAQ composite index fell 19, or 0.8 percent, to 2,541.

Stocks have swung widely in August. The Dow was down as much as 7.4 percent for the year on Aug. 10, but it is now down just 0.9 percent. On Monday, the Dow rose 254 points, its fourth-largest gain this year. Insurers rose the most after it became clear the damage from Tropical Storm Irene wasn't nearly as bad as analysts had feared.

The Standard & Poor's 500 index hit a 2011 low on Aug. 8 after the U.S. government's credit rating was downgraded for the first time. Since then, it has risen 7.3 percent.

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