US stocks dip as personal spending shows weakness

The US Commerce Department said consumer spending ticked up a paltry 0.1 percent, in line with Wall Street's expectations.

stock market good 88 (photo credit: )
stock market good 88
(photo credit: )
SHARES WALL STREET Stocks finished the week with a decline Friday as the financial health of the US consumer came into focus following a report that showed personal spending at its weakest growth in 17 months and a profit warning from J.C. Penney Co. After weeks of concentrating on credit problems and interest rates, the market was forced to pay attention to the consumers who drive economic growth. The US Commerce Department said consumer spending ticked up a paltry 0.1 percent last month, in line with Wall Street's expectations. But that news and the profit warning from J.C. Penney offered renewed room for concern about the well-being of consumers. The market felt some relief after the government said an important inflation gauge tied to consumer spending rose only 0.1% when excluding often-volatile energy and food costs. The reading - the Federal Reserve's preferred measure of inflation - is up 2% over the past 12 months. With so-called core inflation back within the Fed's target of 1% to 2%, it could be easier for the central bank to justify further interest rate cuts without fear of adding too much money to the economy and driving up prices. The Dow Jones industrial average fell 86.06, or 0.70%, to 12,216.40, suffering its third straight decline. Broader stock indicators slipped. The Standard & Poor's 500 index fell 10.54, or 0.80%, to 1,315.22, and the Nasdaq composite index fell 19.65, or 0.86%, to 2,261.18. For the week, the Dow fell 1.17% and the S&P 500 dropped 1.07%. The Nasdaq, which had a sharp rally in recent weeks and trended above the other major indexes, finished up 0.14%. Friday's session came ahead of a week expected to bring another round of key economic data and the end of the first quarter on Monday. With widespread weakness in the stock market many investors are likely eager to close the books on the losses and start fresh on Tuesday. EUROPE Shares managed to chalk up a weekly gain but losses from German utility E.On and oil giant BP added a bit of pressure on Friday as stocks were down for the day. The pan-European Dow Jones Stoxx 600 index edged down 0.6% to 306.68 but was still more than 3% higher on the week following some gains from banks and mining companies. Britain's FTSE 100 index closed down 0.4% to 5,692.90, the German DAX 30 index slipped 0.3% to 6,559.90 and the French CAC-40 index dipped 0.5% to 4,695.92. Turning to the European financial sector, shares of German insurance giant Allianz rose 2.9%. Shares of British Airways slipped 2.9% as problems at the new Terminal 5 at London's Heathrow airport continued into a second day, with long lines at the airport Friday and even some scuffles breaking out between angry and exhausted passengers. ASIA Japan's stock market rose to its highest level in two weeks as last-minute buying before the end of the fiscal year lifted a wide range of blue chips, including electronics and financial shares. The Nikkei 225 stock index rose 1.7% to 12,820.50. CURRENCY The dollar climbed against major currencies even as US data showed weak consumer spending. The 15-nation euro traded as high as $1.5839 Friday, less than a cent below of its all-time high, but was down to $1.5760 in late New York trading - below its level of $1.5780 Thursday. Meanwhile, the pound fell to a record low against the euro after a British industry survey showed UK consumer confidence dropped to a 15-year low. The pound traded down at $1.9916 late Friday in New York after dipping as low as $1.9880 earlier in the day. That compared with $2.0036 in Thursday trading. The euro rose to a record of 79.24 pence in late trading. In other trading, the dollar rose to 1.0191 Canadian dollars from 1.0165 Canadian dollars, and was unchanged at 100.00 Japanese yen. left its rates unchanged. COMMODITIES Gold for April delivery fell $18.20 to settle at $930.60 an ounce on the New York Mercantile Exchange after earlier falling as low as $921.80. Other precious metals also traded lower. Silver for May delivery lost 61 cents to settle at $17.940 on the Nymex, while May copper fell 4.15 cents to settle at $3.8315 a pound. Crude oil retreated Friday on a stronger dollar and word that a bombing of a major oil pipeline in southern Iraq won't significantly slow exports. Prices shot up Thursday on fears that the attack in Basra would cause a major export disruption. Light, sweet crude for May delivery lost $1.96 to settle at $105.62 a barrel on the Nymex. Prices have gained $6.72, or 6.6%, in the last three days.