Stocks in Broad Retreat on Spending Concerns

After reaching record highs in each of the last three sessions, the Dow Jones Industrials took a breather on Monday as investors mulled economic data instead of quarterly corporate reports. The other indices followed suit, led by the NASDAQ, which suffered a 1.26% decline, by far the largest percentage loss of all the exchanges.

Dow 13,062.91 -58.03; NASDAQ 2,525.09 -32.12; S&P 500 1,482.37 -11.70; NYSE Composite 9627.73 -77.63

Once again, the Dow stocks held their own as investors fled more speculative issues in favor of the blue chips, though 20 of the 30 Dow stocks were in retreat. The losses could have been worse, if not for the strong showing of Proctor & Gamble (PG), which rose by 1.42 (2.25%) in anticipation of what is expected to be a solid quarterly report on Tuesday. Volume of PG was more than double its average.

Market internals showed a significant shift in perspective as the week began and the month of April ended. The advance-decline line was the worst in over a month, with declining issues swamping advancers by a better than 7-3 margin. Many more new lows made an appearance as well on Monday, with 137 (also the highest figure in the past 4 weeks) new lows to 300 new highs.

It remains to be seen whether these metrics are going to prove prophetic or just axiomatic of general profit-taking. With the Dow gaining more than 700 points in April alone, some pullback was expected and probably overdue, though longer term issues - such as consumer spending (up a mere 0.2 in March), burgeoning federal deficits and the continuing malaise in residential housing - persist. Recessionary forces are present and the ongoing high price of gas is also a contributor to sour moods and souring predictions.

Speaking of oil, the price of a barrel of light sweet crude also took a short hiatus, losing 75 cents to end the trading day at $65.71. The price of oil and gas continues to be a thorn in the side of American businesses of all sizes, affecting the purchasing power of consumers and driving up the cost of doing business everywhere.

The oil companies may be getting an unwelcome reminder of how upset people are on May 15. An email is making its rounds on the internet urging consumers to boycott gas stations nationwide on that date and forward the email to others so that they may participate. There will be more on that effort in this space tomorrow.

Gold gained $1.70 and silver was unchanged.