Economy doubts halt share gains

US stocks fell, paring the biggest monthly gain since April, as consumer spending slumped and lower- than-estimated earnings from Dell Inc. dragged down technology companies.Starbucks Corp. and Amazon.com Inc. each lost more than 2% in Nasdaq Stock Market trading after the government said growth in spending slowed to 0.2% in July as incomes decreased 0.7%. Dell, the second-biggest personal-computer maker, posted its biggest drop since 2000.Constellation Energy Group Inc. declined 2.6% and helped drive all 31 utility companies in the Standard & Poor's 500 Index lower after Jefferies Group Inc. said the largest US power marketer may have to sell more shares.The S&P 500 slipped 17.85 points, or 1.4%, to 1,282.83, ending a three-day advance. The Dow Jones Industrial Average lost 171.22, or 1.5%, to 11,543.96. The Nasdaq Composite Index retreated 44.12 to 2,367.52. Three stocks fell for each that rose on the New York Stock Exchange.``The environment remains challenged for the equity market,'' Mike Ryan, head of wealth management research for the Americas at UBS Financial Services Inc., told Bloomberg Television. ``As we're faced with the impact of higher energy costs and the lack of availability of credit, that's going to put more pressure on the consumer sector.''Tech leads dropTechnology shares led stocks lower as the Commerce Department report also said prices excluding food and energy, the Federal Reserve's preferred gauge, climbed 2.4% on a yearly basis.The data overshadowed a better-than-forecast reading of 63 in the Reuters/University of Michigan consumer sentiment index and damped optimism spurred by better-than- estimated growth in gross domestic product yesterday and an unexpected increase in orders for durable goods onAugust 27.The Morgan Stanley Cyclical Index, a gauge of companies that rely the most on economic expansion to boost profits, lost 1% today as 26 of its 30 stocks fell. The index jumped 2.5% yesterday for its steepest advance in three weeks. led by a 48% jump in Advanced Micro Devices Inc.About 959 million shares changed hands on the NYSE, 36% below the average for the year. Trading volume had set new lows for the year for five straight days before yesterday US markets will be closed on Sept. 1 for the Labor Day holiday.The S&P 500 gained 1.2% in August, snapping a two- month retreat that sent the measure to an almost three-year low on July 15.
The gain was fueled by a more than 20% drop in oil from a record, a jump in the dollar and growing speculation that the worst of banks' mortgage losses are over.Starbucks, the biggest coffee-shop chain, slid 2.6% to $US15.56, while Amazon, the largest Internet retailer, fell 3.1% to $US80.81.`Continued conservatism'Dell sank 14% to $US21.73. The company said ``continued conservatism'' from some US customers is spreading to western Europe and some Asian countries. Sales growth in those areas slowed last quarter and profit missed analysts' projections after Dell reduced prices.Apple Inc., the maker of the iPod media player and Macintosh computer, lost 2.4% to $US169.53 for the biggest drop in a month. Microsoft Corp. retreated 2.3% to $US27.29, while Intel Corp., the largest chipmaker, slumped 3.1% to $US22.87. Technology companies collectively fell 2.5%, the most in two months, for the steepest.`A hard time'``Anything that's related to the consumer is going to have a hard time and is more than likely going to miss expectations,'' said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $US1.8 billion.Weakness in technology stocks ``has to do with the consumer having to rein in their spending.''Marvell Technology Group fell 4.4% to $US14.11 after the maker of chips for Apple Inc.'s iPhone predicted sales in the current quarter of $US860 million to $US880 million, missing the $US889.2 million estimated by analysts in a Bloomberg survey.The S&P 500 Utilities Index dropped 1.9% for its steepest loss in almost three weeks.Constellation Energy Group Inc. fell 2.6% to $US66.71. The company was cut to ``underperform'' from ``hold'' by Jefferies analysts, who also lowered their estimate for 2009 earnings.International Paper Co. sank 4.4% to $US27.05, the biggest drop in three months, after Deutsche Bank AG cut the world's largest maker of office paper to ``hold'' from ``buy.''Fannie fallsFannie Mae fell for the first time this week, losing 14% to $US6.84. Freddie Mac had the biggest drop in the S&P 500, losing 15% to $US4.51. Bank of China Ltd., the nation's third-largest bank, pared holdings of corporate debt from the two largest US mortgage-finance companies in the past two months amid concern over the potential need for a US government bailout.Separately, the Washington Post reported that Freddie Mac's capital cushion may not be enough to cover losses.PetSmart Inc. rose the most since 2003, climbing 11% to $US27. The largest US pet-store chain said second-quarter profit fell less than analysts estimated, helped by increased boarding and grooming sales for dogs and cats.The S&P 500 and the Dow average both fell 0.7% this week. The Nasdaq Composite Index dropped 2% for the week.The S&P 500 completed only its third monthly advance since reaching a record in October. It is still down 13% this year.The S&P 500's August gain was led by so-called consumer discretionary companies, which include retailers, automakers, lodging companies and restaurant chains. The S&P 500 Consumer Discretionary Index rallied 7% this month for the best gain among 10 industries through yesterdayAn index of telephone shares in the S&P 500 had the second- best return in August with a 3.6% rally. Frontier Communications Corp. led the advance with an 8.7% jump.
The gain was fueled by a more than 20% drop in oil from a record, a jump in the dollar and growing speculation that the worst of banks' mortgage losses are over.Starbucks, the biggest coffee-shop chain, slid 2.6% to $US15.56, while Amazon, the largest Internet retailer, fell 3.1% to $US80.81.`Continued conservatism'Dell sank 14% to $US21.73. The company said ``continued conservatism'' from some US customers is spreading to western Europe and some Asian countries. Sales growth in those areas slowed last quarter and profit missed analysts' projections after Dell reduced prices.Apple Inc., the maker of the iPod media player and Macintosh computer, lost 2.4% to $US169.53 for the biggest drop in a month. Microsoft Corp. retreated 2.3% to $US27.29, while Intel Corp., the largest chipmaker, slumped 3.1% to $US22.87. Technology companies collectively fell 2.5%, the most in two months, for the steepest.`A hard time'``Anything that's related to the consumer is going to have a hard time and is more than likely going to miss expectations,'' said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $US1.8 billion.Weakness in technology stocks ``has to do with the consumer having to rein in their spending.''Marvell Technology Group fell 4.4% to $US14.11 after the maker of chips for Apple Inc.'s iPhone predicted sales in the current quarter of $US860 million to $US880 million, missing the $US889.2 million estimated by analysts in a Bloomberg survey.The S&P 500 Utilities Index dropped 1.9% for its steepest loss in almost three weeks.Constellation Energy Group Inc. fell 2.6% to $US66.71. The company was cut to ``underperform'' from ``hold'' by Jefferies analysts, who also lowered their estimate for 2009 earnings.International Paper Co. sank 4.4% to $US27.05, the biggest drop in three months, after Deutsche Bank AG cut the world's largest maker of office paper to ``hold'' from ``buy.''Fannie fallsFannie Mae fell for the first time this week, losing 14% to $US6.84. Freddie Mac had the biggest drop in the S&P 500, losing 15% to $US4.51. Bank of China Ltd., the nation's third-largest bank, pared holdings of corporate debt from the two largest US mortgage-finance companies in the past two months amid concern over the potential need for a US government bailout.Separately, the Washington Post reported that Freddie Mac's capital cushion may not be enough to cover losses.PetSmart Inc. rose the most since 2003, climbing 11% to $US27. The largest US pet-store chain said second-quarter profit fell less than analysts estimated, helped by increased boarding and grooming sales for dogs and cats.The S&P 500 and the Dow average both fell 0.7% this week. The Nasdaq Composite Index dropped 2% for the week.The S&P 500 completed only its third monthly advance since reaching a record in October. It is still down 13% this year.The S&P 500's August gain was led by so-called consumer discretionary companies, which include retailers, automakers, lodging companies and restaurant chains. The S&P 500 Consumer Discretionary Index rallied 7% this month for the best gain among 10 industries through yesterdayAn index of telephone shares in the S&P 500 had the second- best return in August with a 3.6% rally. Frontier Communications Corp. led the advance with an 8.7% jump.