Stock traders today ignored a nasty drop in consumer confidence and pushed the Dow Jones industrial average to its biggest single-day gain since May, but political odds makers paid close attention to the survey showing consumers are particularly grumpy in key presidential battleground states.
Falling for the third month in a row, the Conference Board's Consumer Confidence Index dropped almost four points to 92.8 -- it's lowest reading since February.
Region-by-region breakdowns showed confidence was even lower in the Middle Atlantic states -- which includes hotly contested Pennsylvania -- in the West North Central -- where Iowa and Minnesota are considered in-play -- and in the East North Central -- with Ohio, Michigan and Wisconsin.
Falling consumer confidence generally bodes badly for politicians who are seeking reelection. Since the privately funded Conference Board began it survey in 1967, only Ronald Reagan was reelected when the Consumer Confidence Index was below 100.
The survey asks people not only how they feel about the economy today, but also what they expect in the future. The "current conditions" index dropped about a point in the latest survey, but the "expectations" factor plunged nearly six points. The drop was due, Conference Board pollsters said, to worries about the job market, which is already a key issue in the presidential election.
Political spinmasters debated the meaning of the survey. Democrats blamed Bush for the decline. Republicans noted that confidence ratings today are not as low as they were just before the elections in 1976, 1980 and 1992 in which incumbents were unseated.
Economic analysts said that if the survey simply reflected a political statement from people preparing to pick a president, it was nothing to worry about. But if the consumer confidence survey is a clue that consumers plan to tighten their belts, it could forecast difficult economic times ahead.
Today traders were focused on a strong rebound in insurance stocks, which have taken a beating in the past couple of weeks because of the wide-ranging investigation of the industry launched by New York Attorney General Elliot L. Spitzer.
Insurance stocks climbed on news of the resignation -- under pressure from Spitzer -- of the chief executive of Marsh & McLennan, the nation's largest broker of commercial and business insurance. Industry experts said that by forcing out Jeffrey Greenberg, Marsh & McLennan may have avoided criminal charges. That was interpreted as good news for other insurers that have been targeted by the state attorney general.
American International Group, another big insurance company, was the day's biggest winner among the 30 stocks in the Dow Jones industrial average. AIG stock recovered by more than $4 a share, contributing about 30 points to the Dow's gain of 138 points today. The Dow closed up 9,888.48.
The Standard & Poor's 500 stock index climbed16 points to 1,111.09, gaining about as much as the Dow on a percentage basis.
The Nasdaq Stock Market composite index lagged behind the other familiar market barometers, climbing 15 points to 1,928.79.
As stocks scored their best advance in three and a half months, traders also put aside worries about crude oil, which climbed 63 cents a barrel to $55.17.