Consumer Confidence Falls for Second Month in October

Amid continued fears about the still-struggling job market, consumer confidence took a surprise dive in October, falling to six-month lows and casting further doubt on Wall Street’s recovery hopes.

According to the Conference Board, confidence fell from an upwardly revised 53.4 reading in September to 47.7 -- the lowest level since April when it was at 31.4. Economists had projected confidence would fall, but only to a 53.1 reading.

On the upside, for the first time since before the Great Recession began, consumer confidence rose on a year-over-year basis in October. It’s also more than doubled since bottoming at 25.3 in February amid the darkest days of the downturn.

The present situation component of the index sank to 20.7, which is the lowest level since Feb. 1983, according to Peter Boockvar, equity strategist at Miller Tabak.

It’s clear the tough job market is weighing on consumers as the jobs hard to get component jumped in October to 49.6, up from 47 the month before and 44.3 in August.

The weaker-than-expected confidence report weighed on Wall Street, sending the Dow Jones Industrial Average down about 90 points from its highs. Shares of consumer discretionary stocks like Apple (AAPL) and Saks (SKS) took a hit on the report.

The markets closely watch confidence data as they can point to consumer spending, which accounts for 70% of U.S. gross domestic product. However, some say given recent increases in retail sales and home prices, consumers may be filling out surveys more pessimistically than they are acting.

“At the end of the day, I think this economy and this market is a whole lot better than people think it is,” Burt White, chief investment officer at LPL Financial, told FOX Business. “I think the consumer is in a decent spot but this survey is going to trick this market a bit.”

Supporting this idea, the spread between the report’s expectations and present situation components remained positive, suggesting a potential up tick in spending on big-ticket items.

“The spread suggests consumers believe future conditions will support current increased spending, but that has yet to translate to spending,” said Mark Lieberman, senior economist at FOX Business.