NEW YORK Stocks tumbled Friday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed. The Dow Jones industrial average more than 170 points, while a disappointing profit report from computer maker Dell Inc. weighed on the technology-heavy Nasdaq composite index.
Meanwhile, investors charted the path of Tropical Storm Gustav as it heads toward the Gulf of Mexico and its oil rigs and refineries.
Wall Street's retreat following the downbeat news about consumers also comes after several days of sizable gains in stocks and on the final session before the long Labor Day weekend. Pre-holiday trading is generally light and some pullback was to be expected.
Still, investors were uneasy after the Commerce Department reported that personal incomes fell by 0.7 percent in July well beyond the drop of 0.1 percent that analysts polled by Thomson/IFR had predicted on average. That reflects the waning impact of tax rebate checks that Americans received this spring.
As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending fell by 0.4 percent in July. Wall Street has been particularly concerned about Americans' ability to help the economy grow, as high prices for gas and food have strapped many household budgets.
According to preliminary calculations, the Dow Jones industrial average fell 171.22, or 1.46 percent, to 11,543.96. The blue chips began the session having logged a three-day advance of nearly 330 points.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 17.85, or 1.37 percent, to 1,282.83. The Nasdaq fell 44.12, or 1.83 percent, to 2,367.52.
For the week, Dow fell 0.99 percent, the S&P 500 lost 1.18 percent and the Nasdaq fell 3.47 percent.