Investors held steady or gave back some of Thursday’s gains in the U.S. and Europe today as the euphoria following the European Union’s deal to stem its debt crisis turned to caution. Even if the worst of the debt crisis has past, both regions face continued economic troubles, which were underlined by weak readings of consumer confidence both in the U.S. and the U.K.
A European Commission-sponsored GfK Consumer Confidence Index showed that shoppers’ sentiment in the U.K. fell to negative 32 in October from negative 30 last month, its lowest level since June 2008. Compared with the same month last year, the index fell 14 points. “At this point in time, consumers’ outlook is becoming increasingly pessimistic about the U.K.’s general economic situation over the coming year,” said Nick Moon, managing director of GfK NOP Social Research.
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And the Thomson Reuters-University of Michigan Surveys of Consumers in the U.S. showed that sentiment inched up to 60.9 for October from 59.4 last month, but was still down significantly from the 67.7 recorded a year earlier.
“The widespread distrust of the President, Congress and the Federal Reserve is now an important cause of pessimism,” said Richard Curtin, chief economist at the Surveys of Consumers. “The upcoming debates about spending cuts and tax hikes surrounding the budget resolution will increase uncertainty and cause consumers to become even more prudent spenders.”
After jumping 3.1 percent Thursday, the S&P Retail Index fell 0.8 percent, or 4.48 points, to 539.10 in midafternoon trading. The Dow Jones Industrial Average, which climbed 339 points Thursday, inched up 0.2 percent, or 18.02 points, to 12,226.57.
Among the retail decliners were Sears Holdings Corp., down 5.5 percent to $77.90; Kohl’s Corp., 3.9 percent to $52.56; Limited Brands Inc., 3.3 percent to $43.75, and The Men’s Wearhouse Inc., 2.6 percent to $30.71.
Most of Europe’s indexes had slipped into negative territory by the close of trading.
The FTSE 100 in London fell 0.2 percent, the CAC 40 in Paris dropped 0.6 percent and the FTSE MIB in Milan fell 1.8 percent. Only the DAX in Frankfurt was up, rising 0.1 percent.
Banking shares, which had led the gains earlier in the day, were the biggest decliners in London, with Lloyds Banking Group and Barclays among the top five worst performing stocks. It’s thought that investors are now seeking more details of how European leaders will implement measures to combat the debt crisis and are acting more cautiously following Thursday’s rally.
Among the European fashion, retailing and luxe stocks that fell were Inditex, down 1.5 percent; PPR, off 1.1 percent; Yoox, which fell 1.5 percent, and LVMH Moët Hennessy Louis Vuitton, which dipped 1.5 percent. Those that rose during the day included Mulberry, up 3.6 percent; Swatch Group, which increased 1.7 percent; Richemont, which rose 1.7 percent and Burberry, which gained 1.2 percent.