S&P Retreats from Highs as Consumer Confidence Weakens
NEW YORK (TheStreet) -- The S&P 500 on Friday was retreating from reaching a record closing high as investors absorbed a plunge in consumer confidence and amid fears of a Federal Reserve cutback of its stimulus program.
The Dow Jones Industrial Average was falling 39.96 points, or 0.27%, to 14,499.18 and poised to snap a 10-day winning streak, the longest since November 1996.
The S&P 500 was down 0.17% to 1,560.50 while the Nasdaq was behind by 0.21% at 3,251.93.
A preliminary estimate on the Thomson Reuters/University of Michigan Consumer Sentiment Index showed a decline to 71.8 in March, the lowest since December 2011, from 77.6 in February. Economists were expecting an improvement to 78.
"It looks like the dip in the preliminary reading of consumer confidence will foil the market's record run, at least until we can understand what is driving consumers' sudden downturn in forward-looking confidence," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York, said in an investor note.
Industrial output did gain 0.7% in February after an upwardly-revised unchanged level in January, the Federal Reserve said, reinforcing evidence of improved economic activity. Production was forecast to rise 0.4%.
Factory usage, known as the capacity utilization rate, rose to 79.6% in February, the highest level since March 2008. The final reading was higher than the upwardly-revised 79.2% in January and the consensus estimate of 79.3%, the Fed said.
"We've stretched the American worker to get out just about as much as we can," Keith Bliss, senior vice-president at the New York-based brokerage Cuttone & Co. told TheStreet during an interview Tuesday at the New York Stock Exchange.
When that happens, companies either need to hire more workers or pay existing workers more money to work longer hours, Bliss added. "Both of those effects have wage inflation impact, and we could start to see more inflation inside the broader economy which then may force the Fed's hand," he said.