Wall Street: Tuesday close

A HINT that America's die-hard consumers might be beginning to buckle sent tremors down Wall Street. The Dow Jones Industrial Average dropped 122.68 points or 1.2% to 9,981.58, leaving the blue-chip index in the red for the year. The Nasdaq, down around 15% since January, 9.32 points or 0.6% to 1652.17.

Behind the drop were figures from the Conference Board, the independent research group, suggesting that consumers' expectations are darkening. The board's reading on consumer confidence rose to 109.8 in May, in line with forecasts, but the survey's expectations index fell to 109.4 from 109.6 in April. 'The latest retreat in expectations suggests that the pace of economic growth will not accelerate in the months ahead,' said Lynn Franco, director of the board's consumer research centre.

US markets are sensitive to every whim of consumers, stalwarts during the recent downturn, in what economists consider a fragile recovery. A downturn in personal consumption, two-thirds of the US gross domestic product, could knock hopes for a continuing recovery and undermine chances of improvement in company profits.

Other economic data released on personal income and spending and home sales came in as forecast, but are considered backward-looking gauges. Consumer expectations are given more weight because they indicate where the economy might be heading.

Retail shares were under pressure even before the Conference Board's survey was made public. UBS Warburg downgraded sector heavyweight Home Depot, claiming the do-it-yourself chain was making too many changes too quickly and was losing senior personnel. Home Depot shares slumped $1.88 or 4.3% to $41.54. Wal-Mart came off 73 cents or 1.3% to $54.79.

Intel led techs lower after Merrill Lynch cut its forecasts slightly for the world's biggest semiconductor company. Intel dipped 31 cents or 1% to $28.35. Microsoft eased 94 cents or 1.8% to $52.32. Dell Computer slipped 37 cents or 1.4% to $26.85.

Golds ticked higher as the precious metal touched a new two-year peak, to close in US futures trading at $325.60 on heightened fears of war between Pakistan and India. Newmont Mining jumped $1.34 or 4.4% to $32.

Broker Charles Schwab bucked a losing trend in financials to push higher by 28 cents or 2.3% to $12.27 on positive media comment. JP Morgan Chase was representative of the sector, retreating 53 cents or 1.4% to $37.27.

ExxonMobil was marked down 39 cents or 1% to $39.84 in a weak oil patch. Enron rival Dynegy rose 39 cents or 4.2% to $9.69 after it announced the departure of its chief executive as it sought to calm worries over its accounting and trading practices.