U.S. stocks were struggling to maintain early gains at midday Tuesday, after the Conference Board reported that its consumer confidence index dropped in January to the lowest level since December 1996.
The drop, which shows Americans are less optimistic about the economy going forward, gives Federal Reserve policymakers added reason to consider cutting interest rates further -- a move that could spur companies to resume spending on technology.
The Fed's Open Market Committee on Tuesday began a two-day meeting on rate policy. Analysts are expecting a 50 basis-point rate cut when the meeting concludes in mid-afternoon Wednesday.
Since consumer spending is a key driver of the economy, however, a big slowdown in confidence could make a recovery harder for the Fed to engineer. The Conference Board's January drop was the largest since October 1990, and the index of consumers' future expectations was the lowest since October 1993, reports said.
Cisco Higher, Nokia Lower
Technology stocks were mixed at midday. The Nasdaq Composite Index, which includes a number of tech issues, was down 0.86 at 2837.48.
Cisco Systems (Nasdaq: CSCO) was the most active stock on the Nasdaq index, trading at US$37.94, up 69 cents at midday. On Monday, Cisco shares fell as the company's chief executive warned of slowing growth.
Mobile phone maker Nokia (NYSE: NOK) helped pull technology stocks lower. Nokia, which was down $3.02 at $33.97 in early afternoon, reported strong results for the fourth quarter ended December 31st, but warned of a slowdown in the current quarter.
Salomon Smith Barney reportedly downgraded Nokia to neutral from outperform following the news, while Merrill Lynch was said to have maintained a buy rating.
Amazon Falls
E-commerce stocks were mixed, with e-tail giant Amazon.com, Inc. (Nasdaq: AMZN) down $1.25 at $18.88 ahead of its quarterly earnings report, due out after the close of trading Tuesday.
Analysts reportedly are expecting the company to lower its forecasts for future earnings, and to announce some cost-cutting measures when it reports results for the fourth quarter ended December 31st.
Amazon competitor Barnesandnoble.com (Nasdaq: BNBN) was down 9 cents at $2.22, while Egghead Software (Nasdaq: EGGS) continued a recent slump, falling 3 cents to $1.06 by midday. Egghead on Friday said sales for the quarter just ended would be lower than previously thought.
Online Travel Shares Rise
Overall, the E-Commerce Times Index, which tracks trading in 10 big-name dot-coms, was up 0.43 percent.
Among other e-commerce issues, Expedia, Inc. (Nasdaq: EXPE) was up $1.38 at $18.12 after the online travel company reported an 81 percent rise in revenue for the latest quarter, along with a smaller-than-expected loss.
The
company, backed by Microsoft Corp. (Nasdaq: MSFT) 
, said it expects strong results in the
future as enhancements to its site bring new customers online. Expedia
rival Travelocity (Nasdaq: TVLY) also traded higher, gaining $1.12 to
$22.62.
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