US shares slid on Friday after a report on sagging US consumer sentiment triggered renewed caution and prompted investors to lock in gains from the recent rally.
The Dow Jones Industrial Average fell 76.79 points, or 0.8 per cent, to close at 9321.40, coming off its worst levels of the day. The Nasdaq composite sank 23.83 points, or 1.2 per cent, to 1985.52 while the broad-market Standard & Poor's 500 index dipped 8.64 points, or 0.9 per cent to 1004.09.
The slide on Wall Street is likely to affect local trading on Monday. SPI 200 futures lost 28 points to 4397 in overseas trade, pointing to a lower start on the local market. And the Australian dollar last traded at 83.29 US cents, sharply down from its local close on Friday at 84.28 US cents.
After a two-day rally, the US market opened modestly lower as traders digested news that US consumer prices held unchanged in July, leaving a year-over-year drop that was the steepest since 1950.
A separate report showed US industrial production rose 0.5 per cent, in the first gain since October 2008.
Selling pressure accelerated after news that the University of Michigan consumer sentiment index dipped to 63.2 from 66.0, below the consensus forecast of 69.0.
"Economic news was mixed, but the weaker-than-expected August consumer confidence report released by the University of Michigan appeared to get the most attention,'' said Scott Marcouiller at Wells Fargo Advisors.
He said the weak consumer survey, which suggested ongoing weakness in consumer spending, "caused investors to re-assess prospects for economic recovery.''
Ian Shepherdson, economist at High Frequency Economics, said the survey suggested weakness in consumer spending, the main driver of economic activity.
"The credit constraint on consumers is so great that we have to wonder whether spending will fall short of the pace implied by its historical link with the confidence numbers,'' he said. ``The numbers for recent months do suggest this is a potentially serious problem.''
Among stocks in focus, Boeing slid 3.8 per cent to $US44.87 after confirming media reports that it stopped production of parts for the delayed 787 Dreamliner at an Italian factory after flaws were discovered.
In the retail sector, JC Penney slid 6.2 per cent to $US31.29 after reporting profits ahead of the consensus but warning of lower earnings in the current quarter.
Fellow retailer Abercrombie & Fitch rose 3.9 per cent to $US34.25 after reporting a quarterly loss that was not as steep as expected after charges.
AFP
