Stocks End Lower

Negative corporate news and signs the U.S. consumer may be flagging hurt the market

Stocks skidded on Tuesday, ending near session lows, as Wall Street grew concerned about corporate profits amid signs the U.S. consumer may be losing optimism.

The Dow Jones industrial average lost 122.68 points, or 1.21%, to 9,981.58. The Standard & Poor's 500 Index, meanwhile, was off 9.27 points, or 0.86% to 1074.55. The Nasdaq Composite Index lost 9.32 points, or 0.56%, to 1,652.17.

The economic data docket and earnings calendar are light on Wednesday. The next significant release, an update on jobless claims for the week ended May 25, is expected for Thursday. More attention could be paid to at least two major crises on the global front.

Tension remains high in the Middle East where another suicide bomber killed two Israelis. And Pakistani and Indian troops are amassing on the border between the two countries as the nations remain in a stalemate over what to do with the disputed state of Kashmir.

In earnings, Blue Rhino (RINO ), a propane cylinder exchange service provider, is one company that is due to release it quarterly earnings report.

On Tuesday, the Conference Board said its closely watched index of consumer confidence rose to 109.8 in May from a downwardly revised 108.5 in April. The index was slightly lower than expected and below March's reading of 110.7. The U.S. consumer was largely responsible for keeping the economy afloat during the recession.

Meanwhile, the U.S. income and spending report for April revealed surprising consumer cautiousness in early 2002, according to Standard & Poor's economic research unit MMS. U.S. personal income rose 0.3% in April after an unrevised 0.4% gain in March. Personal consumption expenditures (PCE) were up 0.5% from a revised 0.3% gain (+0.4% originally). The spending data were a little weaker than had been expected, MMS says.

Real consumption growth is slowing to the 2% area in the second quarter following the 3.2% growth rate in the first quarter, while disposable income should grow at a 3.5%-4% rate in the second quarter despite the huge 14.6% growth clip in the first quarter, MMS says.

Countering some of the bad news was a report from the World Semiconductor Trade Statistics service that said worldwide sales of semiconductors will rise 2.3% to $142.2 billion this year. Stocks like chipmaker Advanced Micro Devices (AMD ) were slightly higher.

But shares of Intel (INTC ), the world's No. 1 chipmaker, moved lower after Merrill Lynch trimmed its 2002 earnings per share estimate for the company with expectations of flat second quarter sales.

In other corporate news, energy trader Dynegy Inc. (DYN ) said Chuck Watson, chairman and chief executive officer, resigned. The company is the center of a Securities and Exchange commission probe on the legality of certain trades.

No. 1 home improvement retailer Home Depot (HD ) was cut by UBS Warburg to "hold" from "buy" on fears the company may taking on more change than it can deal with.

Treasury Market

Treasuries ended flat to higher on the weakness in stocks after the lower than rumored headline consumer confidence figures.

Meanwhile, U.S. sales of existing or previously owned homes rose 7% in April to the third-highest level on record, an industry report showed. April's sales reached an annual pace of 5.79 million units followed a revised 5.41 million-unit rate in March, the National Association of Realtors said.

World Markets

European markets ended lower. London's FTSE 100 index was off 62.10 points, or 1.21%, to 5074.20 even though European investor optimism has risen. Bonds are higher in a flight to safety from worries about an India-Pakistan confrontation.

In Paris, the CAC-40 was down 21.14 points, or 0.48%, to 4,339.57.

Germany's DAX index was off 42.98 points, or 0.87% to 4,918.58 in carryover from yesterday's rise on stronger than expected Ifo sentiment index.

Asian markets closed mixed.

The Nikkei index in Japan was down 40.27 points, or 0.34%, to 11,936.08 as exporter shares rose on the back of stability in the currency markets while domestic-related shares fell on profit-taking.

The Hang Seng index in Hong Kong was up 16.85 points, or 0.15%, to 11,581.58.

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