Stock Markets Pounded, Bond Prices Hounded, Consumer Confidence Grounded
But any hope of a return to happy days when bulls roamed the Street mooing about good times ahead were dashed yesterday as the index of giant industrial companies lost three-quarters of a percent, as did the broader index of 500 big companies' stocks. The NASDAQ composite index fell nearly a full percentage point in value, pulling ever further below the 2000 point mark above which it had valiantly struggled to stay until last week.
Dark Wraith CyberGlossIndices like the Dow Jones Industrial Average and the Standard & Poors 500 measure the pulse of big-company corporate America, while indices like the NASDAQ composite indicate how investors are assessing the health of the far larger set of companies that are relatively small by comparison.
Fueling investor woes was a larger than expected drop in the Conference Board's March consumer confidence index, which fell by two full points to 102.4 from a revised February figure of 104.4. Analysts had expected an easing of the index but had forecast that it would fall to 103, pointing once again to professionals' failure to come to grips with and adequately model the extent of the weakening of the American economy as gasoline prices, interest rates, and costs of consumer goods and services all move into ranges where households begin to experience real and noticeable adversity.
Bond prices, which slid on Monday, went down fractionally more on Tuesday, pushing yields upward. The ten-year Treasury bond closed Tuesday at a yield of 4.66 percent, up two basis points from Monday. Short-term Treasury bills and the long bond stepped up, too.
In early news on Wednesday morning, the revised figures for fourth quarter, 2004, GDP were released without any change in the overall measure of the economy's growth rate.
However, a somewhat less noticed figured released on Tuesday was the change in the consumer-level price index that excludes the costs of food and energy, both of which are contributing substantially to rising expenditures for households. However, even taking these two price busters out of the equation, the price index for the fourth quarter rose at an annualized rate of 1.7 percent, just about double its annualized pace in the third quarter. Federal Reserve Chairman Alan Greenspan has stated on more than one occasion that he pays particular attention to this "core" inflation rate indicator, so its upward momentum in the waning months of last year means that he will be very unlikely in the coming months to back off the Fed's battle against inflation, which he still claims to Congress is under control, despite spiraling costs of energy and other products that consumers are seeing in their everyday lives.
Dark Wraith CyberGlossMost figures that are released by the government are later revised, usually because more complete data have come in. While the initial numbers are generally given wide attention in the media, the revised figures are barely mentioned, even when they differ significantly from those released initially.