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Stocks end lower on personal income data
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NEW YORK - Wall Street tumbled Friday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed. The Dow Jones industrial average dropped more than 170 points, while a disappointing profit report from computer maker Dell Inc. weighed on the technology-heavy Nasdaq composite index.
Meanwhile, investors charted the path of Hurricane 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 and 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.
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 fell by 0.4 percent in July. Wall Street has been concerned about Americans’ ability to help the economy grow, as high prices for gas and food have strapped many household budgets.
“My biggest concern with the income data is that we’re getting off to a weak start to the third quarter,” said Robert Dye, senior economist at PNC Financial Services Group.
The Dow fell 171.63, or 1.47 percent, to 11,543.55. The blue chips began trading Friday having logged a three-day advance of nearly 330 points. Broader stock indicators also lost ground.
The week’s trading was again marked by volatility. After tumbling Monday on worries about the credit markets and finishing mixed Tuesday, stocks rose Wednesday and Thursday.
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