Oct 30, 2009 (SmarTrend(R) Market Commentary via COMTEX News Network) -- Last updated October 30, 2009: 4:20 PM ET --- The major U.S. equity indices closed lower Friday as a drop in consumer spending increased worries that the economic recovery won't be sustainable. The Chicago Board Options Exchange's Volatility Index rose nearly 25% to 30.88, the highest since early July. The Labor Department said consumer spending fell 0.5% in September, inline with forecasts, but it was the biggest drop in nine months and followed a 1.3% rise in August, which was boosted by the government's Cash for Clunkers program. The Reuters/University of Michigan consumer sentiment index fell to 70.6 in October from 73.5 in September. The Labor Department also reported that personal income was flat in September compared with the previous month, in line with expectations. A lack of income growth is due to ongoing high unemployment rates, which is a major concern for the market. In corporate news, CIT Group Inc. (NYSE:CIT) shares dropped 21% after the commercial lender said Carl Icahn agreed to support its restructuring plan and provide it with a $1 billion line of credit. Investors are still worried that CIT will file for bankruptcy. Other financials that fell today include Bank of America (NYSE:BAC), down 6.9%, and JPMorgan Chase (NYSE:JPM), down 5.6%. Energy and basic materials producers also tumbled today including Alcoa Inc. (NYSE:AA), down 4.9%, and Exxon Mobil (NYSE:XOM), down 3.1%. The Dow Jones Industrial Average closed 2.51% at 9,712.73, the S&P500 fell 2.81% to 1,036.18, and the Nasdaq Composite fell 2.50% to 2,045.11.
Write to Chip Brian at cbrian@tradethetrend.com
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