US consumer confidence increased in May but a slight increase in apprehension about the future among American shoppers combined with continuing geo-political concerns over terrorism threats, India-Pakistan and Argentina to drive down stocks on Wall Street and further weaken the dollar. "The latest retreat in expectations suggest that the pace of economic growth will not accelerate in the months ahead," said Ms Lynn Franco, director of the non-profit Conference Board's Consumer Research Center.
The Conference Board reported that consumer confidence rose this month to 109.8 from 108.8 in April but the expectations index, which measures how consumers feel about the direction of the economy, fell in May to 109.4 from 109.6 in April. American consumers drive two thirds of the world's largest economy and the slip in expectations had the Dow Jones Industrial Index dipping below the 10,000 mark for the first time in several weeks.
The dollar also fell against other major currencies yesterday as gold prices rose. The euro was quoted at 92.61 cents in late European trading, up from 91.95 cents on Monday and strengthened further in midday trading in New York, rising to 92.87 cents.
Mr Brian Wesbury, chief economist for the Joint Economic Committee of Congress, said that other data yesterday from the US Commerce Department showing personal income rising in April by 0.3 per cent and personal consumption rising by 0.5 per cent, still suggested a recovery was under way.
"Consumer spending and personal income lag employment, and employment lags the manufacturing sector," he said.
With manufacturing getting stronger "it is only a matter of time before the economy starts to strengthen across the board." Consumption remained strong, inventories continued to fall and imports rose for the first time in six quarters.
Mr Brian Marchiony of JPMorgan Economics also drew a positive picture of world trends, pointing to global growth rising 3.4 per cent in the first quarter, Japan ending its recession and better news on US profits and business spending.
Other analysts said the US stock market remained depressed over fears that price levels are too high by many historical measures. The Dow was weighed down by chip-maker Intel which fell 3 per cent after Merrill Lynch analyst Mr Joseph Osha trimmed earnings and revenue estimates.
Stop/loss buying sent the euro as high as 92.92 cents against the battered dollar, its highest since September 21st, 2001 and up 0.90 per cent on the day.
"The trend in the dollar is down," said Mr Paul Podolsky, currency strategist at Fleet Global Markets in Boston.
