Wall Street: Wednesday close

MARKETS staggered on a hint that America's shop 'till you drop consumers - stalwarts in steadying the world's biggest economy during its latest slump - might be wilting.

The Dow Jones Industrial Average, which has been surging on hopes for a rebound in the economy and company profits, fell 130.50 points or 1.23% to 10,501.85. The Dow has made little headway since first hitting 10,000 on March 16, 1999. The Nasdaq Index, which started the day down roughly 60% from its March 2000 highs, surrendered 35.09 points or 1.85% to 1,862.03.

Washington helped spark the sell-off in reporting that retail sales in February rose 0.3% overall and just 0.2% with volatile motor vehicle sales excluded, well below the 0.7% to 1% increases expected. Some economists worried that the figures might portend a double dip in the economy, underscoring recent data indicating a downturn in consumer confidence. But more optimistic commentators said that a slowdown was expected after fourth quarter retail sales rose at the fastest pace in three and a half years.

'The recovery is proceeding, but gradually, and that's actually healthy,' said Anthony Chan, chief economist at investment firm Banc One Investment Advisors. 'It's the kind of recovery central bankers dream of - gradual, not explosive, and therefore long-lasting and sustainable.'

Consumer spending, which comprises two-thirds of activity in the US economy, has been watched closely, especially lately, because it helped prevent an even deeper manufacturing-led slump. One school of thought is that the US economy could falter given the knock to confidence from the Enron scandal, questions over company accounting generally and continued job lay-offs. An additional fear is that an anticipated attack on Iraq could send energy prices soaring, imposing the equivalent of a new tax on the energy-dependent US and driving the economy back into recession.

Selected consumer-related shares were marked down on the retail sales numbers. Wal-Mart retreated 28 cents or 0.5% to $61.95 after recently touching new all-time highs and diversified conglomerate General Electric closed lower by $1.13 or 2.8% to $39.97.

Not helping investor confidence were negative words from the brokerage community on certain techs. Intel dipped $1.69 or 5.1% to $31.30 and Advanced Micro Devices shed $1.33 or 8.4% to $14.42 after JP Morgan cut revenue estimates for the semi conductor makers. Chip manufacturing equipment makers Applied Materials lost $1.58 or 2.3% to $49.48 and Novellus gave up $1.95 or 3.8% to $48.96.

Personal computer company Dell eased $1.16 or 4.1% to $26.84 and Sun Microsystems was marked down 35 cents or 3.6% to $9.48 as Salomon Smith Barney said that the companies would either revise expectations downward or miss their sales targets.

Telecom and telecom suppliers hit on Tuesday were mostly lower. Lucent dropped 67 cents or 12% to $4.98, Nokia gave up 31 cents or 1.4% to $21.78 and AT&T slipped 43 cents or 2.7% to $15.71. Cisco, which continues to battle suggestions its financial reporting has not been clear enough, fell 41 cents or 2.4% to $16.36.

Defence equipment maker TRW rose 86 cents or 1.7% to $51.14 as it rejected a hostile offer of $11.4bn. from Northrop Grumman. TRW said it would sell its automotive parts business.