Wall St: Tuesday mid-session

 

Wall Street hung its hopes on another cut in interest rates as American shoppers took a turn for the gloomy. Markets pushed higher despite new figures showing consumers revising their expectations. Investors apparently decided that America's Federal Reserve, which pays close attention to consumer confidence, would use the latest survey as an excuse to step in again and lower interest rates when it meets next on 15 May.

The Nasdaq Composite Index rose 8.46 points or 0.41% to 2,067.78 by mid-session and the Dow Jones industrial average rose 26.87 points or 0.26% to 10,559.10.

Writ large on trading screens was a closely-watched report from the Conference Board, the private New York-based research group, which said its index of consumer sentiment fell to 78.2 in April from a downwardly-revised 83.1 in March, suggesting that four interest rate cuts from the Fed so far this year have not stemmed the erosion in confidence.

'Deteriorating business conditions and a less favorable job market are the two critical reasons for the latest decline in confidence,' said Lynn Franco, director of the Conference Board's Consumer Research Centre. 'It's clear that consumers have begun to worry about employment trends and these concerns are gnawing away at consumer confidence.'

Analysts said investors chose to look on the positive side of the report - the increased chances of a rate cut. 'The Fed has clearly switched gears to focus on consumers with the surprise rate cut,' said Donald Berdine, chief investment officer at PNC Advisors. `I think the market feels the Fed is on track.'

Some consumer-related shares traded lower on the report. Consumer products maker Procter & Gamble gave up $1.15 or 2% to $56.90. Wal-Mart retreated $1.28 or 2.5% to $50.76.

The report appeared to deflect attention away from some disappointing quarterly earnings reports. Computer maker Compaq, which reported a 74% in its profits after the close of trading on Monday, tumbled $2.25 or 10.9% to $18.40. Telecom equipment maker Lucent slid 12 cents or 1.3% to $9.07 after it reported lower profits on shrinking demand for its products. And fibre-optic components company JDS Uniphase was down $1 or 9% to $22.27 after it said slower demand would cause it to cut 5,000 jobs or 20% of its workforce.

Morgan Stanley Dean Witter fell 30 cents or 1.6% to $22.32 as it confirmed it was cutting 1,500 of its 63,500 employees. Toymaker Hasbro was down slightly at $11.71 after it blamed slowing sales of Pokemon toys for its less than stellar performance.

Software maker Oracle rose 81 cents or 4.7% to $17.96 despite a downbeat assessment of the outlook from chief executive Larry Ellison. 'We have such a conspicuous slowdown, it almost feels like, especially for my industry, we've been in a recession for a long time,' Ellison said at a press conference. 'When will we resume normal growth is anybody's guess. I think by the end of the calendar year or the end of the first quarter next year.'

Techs were mixed. Hewlett-Packard shed 45 cents or 1.5% to $30.51. IBM rose $1.36 or 1.2% to $113.36, Microsoft fell 99 cents or 1.5% to $67.26, Cisco Systems was off 27c or 1.6% to $17.06 and Dell slid 97 cents or 3.3% to $28.38.

Telecom giant AT&T added 34 cents or 1.6% to $22.32 after it beat profit estimates. DuPont firmed 95 cents or 2.2% to $45.08 on figures which came in above expectations.