Stocks steady after consumer confidence report

By Lisa Singhania

Associated Press

NEW YORK – Stock prices moved higher Tuesday, showing signs of stability despite a report that consumer confidence plunged following the Sept. 11 terrorist attacks.

The Conference Board said its consumer confidence index fell to 97.6 this month from 114 in August, the lowest reading since January 1996. The numbers are closely watched because consumer spending accounts for two-thirds of the economy.

But analysts said the bigger concern for the market is still weak corporate profits, which show few signs of improving soon because of the attacks.

“The fact that stocks are up is modestly encouraging. But this figure tends to be more of an indicator what people are feeling right now, rather that what will happen going ahead,” said Will Braman, chief investment officer for John Hancock Funds. “We’re more focused on companies and industries and what they’re saying are the prospects for a turn in earnings.”

In late morning trading, the Dow Jones industrial average rose 54.11 to 8,657.97, extending its 368-point gain Monday in a rebound from last week’s 1,369-point plunge.

Broader indexes also rose for a second session. The Nasdaq composite index was up 15.98 at 1,515.38, while the Standard &Poor’s 500 index rose 10.84 to 1,014.29.

Analysts partly attributed the market’s steadiness Tuesday to the fact that stocks are still oversold after last week’s precipitous drop and are attractive-to bargain hunting investors.

“We’ve just come down such a dramatic decline that I’d expect us to bounce. Having done that, it’s now important that we simply stabilize. If we start dumping stocks again, that’s a problem,” said Larry Wachtel, market analyst at Prudential Securities.

Prior to the hijackings of planes that crashed into the World Trade Center and Pentagon, most analysts estimated the weakened economy, along with corporate profits, would start to improve early next year. That forecast has been revised as the economic fallout begins to be assessed.

The most striking impact has been on the airlines, which have cut more than 100,000 jobs and reduced flight schedules, citing Americans’ fear of flying in the aftermath of the attacks. The tourism industry has also been hurt.

Other industries have also blamed the disaster for difficult times ahead – but Wall Street had a mixed reaction to the most recent warnings and discouraging news.

Honeywell fell 98 cents to $26.86 on word that 2001 job cuts will total 15,800. It had previously estimated 12,000.

But AOL Time Warner was up 20 cents to $32.70 despite warning late Monday it now expects slower growth in earnings and revenues this year because of a slump in advertising, which was worsened by the terrorist attacks.

Retailers also fared mostly better. Wal-Mart rose $1.17 to $48.45, its second straight advance.

Also Tuesday, the National Association of Realtors reported that sales of previously owned homes jumped to a record level in August, but have slowed in the wake of the terrorist attacks two weeks ago. Strong demand for homes has helped support the sagging economy, and the data appeared to bring into question how long that support would last.

“Right now the consumer doesn’t have a lot to look forward to,” said Bill Barker, investment consultant at Dain Rauscher. “There wil likely be more layoffs and certainly a weaker stock market and a stalling in house prices and price appreciation.”

Advancing issues led decliners 4 to 3 on the New York Stock Exchange. Volume came to 477.21 million shares, compared with 511.33 million at the same point Monday.

The Russell 2000 index was up 1.69 at 395.48.

Overseas, Japan’s Nikkei stock average rose 1.5 percent. In afternoon trading, Germany’s DAX index was up 1.2 percent, Britain’s FT-SE 100 was up 0.8 percent, and France’s CAC-40 was up 1.0 percent.