Consumer Confidence Tanks; Markets Dip - TheStreet

Consumer Confidence Tanks; Markets Dip

Consumer confidence drops sharply in June, and the markets head down on the pessimistic outlook.
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NEW YORK (

TheStreet

) -- The Conference Board Consumer Confidence Index showed a steep decline in June of 10%, the first decline in the past four months. The sharp drop in consumer confidence helped send the markets tumbling early on Tuesday.

The Consumer Confidence Index now stands at 52.9, down from 62.7 in May.

Lynn Franco, director of The Conference Board Consumer Research Center, said in the Conference Board statement on the consumer confidence decline, "Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence. Until the pace of job growth picks up, consumer confidence is not likely to pick up."

There was little good news in the details of consumer sentiment. Consumers saying conditions are "good" decreased to 8% from 9.7%, while those saying business conditions are "bad" increased to 42.4% from 39.5%. The consumer view of the labor market was also more pessimistic and the short-term outlook, more generally, took a marked turn for the worse. Consumers anticipating an improvement in business conditions over the next six months decreased to 17.2% from 22.8%, while those expecting conditions will worsen rose to 14.9% from 11.9%.

The Dow Jones Industrial Average and S&P 500 Index were both down more than 2% in morning trading on Tuesday, with the steepest decline occurring concurrent with the release of the consumer confidence data.

Bellwether U.S. stocks like

Alcoa

(AA) - Get Report

,

GE

(GE) - Get Report

and

Caterpillar

(CAT) - Get Report

were taking big losses on Tuesday morning, each down by 4% to 5% in early trading.

-- Written by Eric Rosenbaum from New York.

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