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Stocks fall for third day on consumer spending slump

Business Materials 3 February 2009 03:20 (UTC +04:00)

Wall Street stock indices fell for the third straight trading day Monday as US consumer spending dropped for a record sixth consecutive month and more companies announced job cuts, dpa reported.

Consumer spent 1 per cent less in December at an annual rate than in the previous month, the Commerce Department said. For the whole of 2008, consumer spending climbed 3.6 per cent, the smallest increase since 1961.

Many consumers have been saving over the last few months as the United States, the world's largest economy, grapples with a serious recession that began in December 2007.

Macy's, the second-largest US department store, said Monday it will eliminate about 7,000 positions as part of a restructuring effort designed to save money as consumers have scaled back their spending.

The jobs amount to about 4 per cent of its workforce of 180,000 and come amid tens of thousands lay-offs at US companies in recent weeks.

The country's manufacturing sector also continued to decline in January. The Institute for Supply Management's manufacturing index stood at 35.6 on the month, well below the 50-point dividing line between growth and contraction.

But technology stocks were a bright spot on the day, led by Microsoft Corp and Humana Inc, a health-insurance provider that posted better-than-expected earnings.

The blue-chip Dow Jones Industrial Average dropped 64.11 points, or 0.80 per cent, to 7,936.75. The broader Standard & Poor's 500 Index was largely unchanged, declining 0.44 points, or 0.05 per cent, to 825.44. But the technology-heavy Nasdaq Composite Index rallied 18.01 points, or 1.22 per cent, to 1,494.43.

The US currency fell against the euro to 77.84 euro cents from 78.05 euro cents on Friday. The dollar dropped against the Japanese currency to 89.48 yen from 89.92 yen.

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