The Dow Jones slipped on Tuesday after consumer confidence suffered a nosedive in the United States.
Concerns about the snowball effect of a potential blow to retail spending took the wind out of the overall market. A banner day for Pfizer stock helped cushion the Dow against steeper losses.
As of 3:20 pm ET, the DJIA had fallen by 92.65 points or 0.35% to 26,492.12.
The S&P 500 dipped 0.24% to 3,231.5.
The Nasdaq fell 0.81% to 10,450.54 as investors continued to sour on growth stocks.
There was only one significant piece of economic data in the U.S. released today, and this was CB consumer confidence.
While the trend had been for a brighter mood on Main Street, things have soured.
A reading of 92.6 was sharply lower from last month’s reading above 98 – and considerably weaker than the consensus estimate of 94.5.
Dow bulls pay particular attention to consumer confidence because it can have a direct impact on the employment situation.
If consumers stop spending because their confidence in the economy drops, job losses can pile up, particularly in the giant U.S. services industry.
Economists are viewing the latest reading with some trepidation.
ING forecasts that rising coronavirus cases will continue to hammer confidence – and cripple the odds of a third-quarter recovery:
States that are experiencing the biggest resurgence of Covid-19 were the states that saw the biggest declines in confidence. For example, California expectations fell 25 points, Texas fell 32 points, Florida fell 27 points, and Michigan fell 53.3 points!
In contrast, New York saw a RISE in expectations given the rapid fall in cases in the state. Taking this altogether, the return of economic dislocations from Covid-19 makes us increasingly cautious on the prospects for the 3Q economic revival.
It’s positive that sentiment is rising in New York, but confidence in Florida and Texas is unlikely to pick up anytime soon. The former just announced a record single-day death toll.
At the same time, a tropical storm is battering Texas. Governor Abbot fears this could cause an even greater spike in virus cases as families shelter together.
A mixed day in the Dow 30 ultimately saw the index slog lower.
Shining in the green, Pfizer stock rallied an impressive 4.6% after its earnings beat expectations. Perhaps the biggest news was the announcement that its coronavirus vaccine is entering the final stage of testing.
Unfortunately, Pfizer holds the smallest weighting among the Dow’s 30 members.
The index’s heaviest weighted stock is Apple, which fell 1.2%. AAPL’s weighting is roughly ten times as large as PFE’s, so this move lower more than offset Pfizer’s gains.
McDonald’s stock (-2.2%) added to the malaise after its earnings miss, though 3M’s 4.7% slide made MMM the biggest loser in the Dow.