Stocks fall after personal income data; oil rises

Friday August 29, 10:47 am ET By Tim Paradis, AP Business Writer
Stocks fall as drop in personal incomes stirs concerns about consumers; Dell weighs on techs
NEW YORK (AP) -- Stocks declined unevenly Friday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed. A disappointing profit report from computer maker Dell Inc. weighed on technology stocks.
Meanwhile, oil prices rose as investors charted the path of Tropical Storm Gustav as it heads toward the Gulf of Mexico and its oil rigs and refineries.
Wall Street's retreat following the downbeat news about consumers also comes after several days of sizable gains in stocks and on the final session before the long Labor Day weekend. Pre-holiday trading is generally light; therefore, some pullback was to be expected.
Still, investors were uneasy after the Commerce Department reported that personal incomes fell by 0.7 percent in July -- well beyond the drop of 0.1 percent that analysts polled by Thomson IFR had predicted on average. That reflects the waning impact of tax rebate checks that Americans received this spring.
As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending actually fell by 0.4 percent in July. Wall Street has been particularly concerned about Americans' ability to help the economy grow, since rising prices for gas and food have strapped many household budgets.
In midmorning trading, the Dow Jones industrial average fell 80.85, or 0.71 percent, to 11,632.44. The blue chips began the session having logged a three-day advance of nearly 330 points.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 9.15, or 0.70 percent, to 1,291.53. The technology-heavy Nasdaq composite index fell 31.69, or 1.31 percent, to 2,379.95.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to an anemic 153.9 million shares. Trading has been light all week, prompting some observers to dismiss the market's moves as aberrations that occur when many traders are on vacation.
Bond prices fell Friday. The 10-year note's yield, which moves opposite its price, rose to 3.81 percent from 3.79 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $2.41 to $118 per barrel on the New York Mercantile Exchange. So far, oil trading has been fairly orderly as Gustav progresses, although there is concern about damage from the storm or a disruption in the flow of gasoline and other fuel from Gulf Coast refineries.
With many investors fixated on the thickness of the consumers' wallets, Wall Street showed little reaction to the Reuters/University of Michigan's index on consumer sentiment, which rose to 63 for August from 61.2 in July, its highest level in five months. Still, most economists reason that consumers who are upbeat about their prospects are more likely to spend.
Also, investors shrugged off the Chicago Purchasing Managers' index, which measures business conditions across Illinois, Michigan and Indiana. It jumped to 57.9 from 50.8 in July.
In corporate news, Dell fell $3.05, or 12 percent, to $22.16 after the company's profit margins came in well below what analysts had been expecting.
The Russell 2000 index of smaller companies fell 8.12, or 1.09 percent, to 739.67.
In Tokyo, the Nikkei index rose 2.39 percent. In afternoon trading in Europe, London's FTSE-100 index rose 1.32 percent, Frankfurt's DAX fell 1.57 percent and the CAC-40 index in Paris rose 0.81 percent.
New York Stock Exchange: http://www.nyse.com
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