WALL STREET Stocks take tumble as confidence dips

Economists also cited normal profit-taking before the holiday weekend.
NEW YORK (AP) -- An all-time record U.S. trade deficit and a surprising drop in consumer confidence sparked profit-taking on Wall Street Friday, sending stocks lower despite the week's bullish economic news from the Federal Reserve.
The selloff was prompted by an unexpected 10-point dive in the University of Michigan's mid-February consumer sentiment index. Economists had forecast a slight rise. And before the session began, the Commerce Department reported a 17.1 percent increase in the trade deficit to $489.4 billion for 2003, far outstripping the previous record of $418 billion set in 2002.
While some investors found the latest data confusing given Fed chairman Alan Greenspan's optimistic assessment of the economy, the falling prices were also due to the normal spate of investors cashing in profits before the long holiday weekend.
"The consumer confidence and the trade figure was not good news," said Peter Cardillo, senior vice president and chief market analyst for S.W. Bach & amp; Co. "But this doesn't necessarily reverse the bullish sentiment in the market."
The numbers
According to preliminary calculations, the Dow Jones industrial average dropped 66.22, or 0.6 percent, to 10,627.85, but finished the week 0.3 percent higher thanks to Wednesday's 123-point gain. It was the Dow's second straight winning week.
Broader stock indicators also fell for the day. The Standard & amp; Poor's 500 index was down 6.30, or 0.6 percent, at 1,145.81, but managed a second straight weekly advance, rising 0.3 percent. The Nasdaq composite index fell 20.05, or 1 percent, to 2,053.56, falling 0.5 percent for its fourth straight down week.
Despite the trade deficit figure, which was far worse than Wall Street expected, there was good news in the Commerce Department report. U.S. exports totaled $1 trillion, the best showing since 2000 and a 4.6 percent increase from 2002. That, combined with a generally good week of economic news, shored up prices.
However, neither economic figure helped investor confidence, despite Greenspan's better-than-expected forecasts. A weakening dollar and higher oil prices also contributed to the decline, and economists believe the strong earnings reported for the fourth quarter won't be sustained through 2004.
"You've got a number of indicators that corporate profits are going to be weaker than expected," said Tracy Herrick, chief economist at the Private Bank of the Peninsula in Palo Alto, Calif. "The strength of the market will have to focus more on interest rates than corporate profits, especially as we get into the second half of the year."