Wall Street edges down amid flu scare

NEW YORK: Wall Street stocks wobbled lower Tuesday as worries about the spread of swine flu and a weak banking system offset a survey showing rising US consumer confidence.

The Dow Jones Industrial Average edged down 8.05 points (0.10 per cent) to close at 8,016.95, in a choppy session that saw modest swings in both directions.

The Nasdaq composite shed 5.60 points (0.33 per cent) to 1,673.81 and the Standard & Poor’s 500 broad-market index lost 2.35 points (0.27 per cent) to 855.16.

Trading was cautious as world health officials ratcheted up their alert level and the death toll from swine flu reached more than 150 in Mexico.

Adding to investor jitters was a Wall Street Journal report that the Federal Reserve had advised Citigroup and Bank of America that they need to strengthen their capital following “stress tests” conducted by authorities.

But the mood brightened after the Conference Board reported its April index of consumer confidence rose to 39.2 from 26.9 a month earlier, in a hopeful sign for consumer spending, a key driver of US economic activity.

Ian Shepherdson, chief US economist at High Frequency Economics, called the survey “a pleasant surprise,” but cautioned that “the numbers are very weak still.”

Others saw the survey as a potential turning point for the economy.

“Consumers continue to see current conditions as bleak, but are becoming much more upbeat about the outlook, particularly for jobs and business conditions,” said Scott Hoyt at Moody’s Economy.com.

“This is a very positive sign for the economic outlook and provides further evidence that the recession should not extend beyond the end of this year.”

Still, Wall Street and other markets remained focused on the flu outbreak.

Patrick O’Hare at Briefing.com said recent market action suggests “the market respects the swine flu scare, but that it isn’t fully intimidated by it given the past experiences with SARS and the avian flu.”

He added that the market is is “a normal period of consolidation after a strong run,” that has pushed up the broad market by some 27 per cent since early March.

“The swine flu scare will simply make it more difficult for the time being for stocks to make much headway,” he said.

Markets also paused to await Wednesday’s outcome of a two-day Federal Reserve meeting, which was expected to maintain the central bank’s easy credit in an effort to lift up the sagging economy.

“The Fed will probably cite continuing weakness in the housing and auto markets and in employment as continuing risks to the economy,” said Fred Dickson at DA Davidson & Co.

“The Fed statement might temper expectations held by a growing number of investors that the economy is about ready to bottom out and turn the corner.”

Among key stocks, Pfizer fell 0.74 per cent to US$13.39 after the pharmaceutical sector leader reported profits ahead of expectations but a murky outlook for the rest of 2009.

IBM added 1.99 per cent to US$101.94 as the computer giant boosted its dividend.

Retailers showed a muted response to the improved consumer confidence reading: Wal-Mart fell 0.08 per cent to US$48.47 and Home Depot rose 0.73 per cent to US$26.07. - AFP