New York Consumer confidence in the economy plunged in October to the lowest level since 1993, buffeted by a weak job market and the threat of war with Iraq, a research group said Tuesday.
The Conference Board's Consumer Confidence Index dropped to 79.4, down from 93.7 in September.
The fall was much sharper than predicted on Wall Street, where economists had been looking for a reading of 90.0.
Financial markets dropped on the report. In the first hour of trading, the Dow Jones industrial average was down 95.64, or 1.1 percent, at 8,272.40. The Nasdaq composite index fell 23.44, or 1.8 percent, to 1,292.39.
The Dow rebound to close up 0.90 points; the Nasdaq was off 15.29 points for the session.
It was the fifth straight month of decline for the confidence index, widely watched because of the importance of consumer spending.
The index fell past a recent low of 84.9 in November last year, when economic expectations were dampened by a recession and the Sept. 11 terrorist attacks.
The 14.3-point drop in the index from September to October was the sharpest fall since it fell 17 points from August to September last year, in the wake of the terrorist attacks.
The last time the index was lower was in November 1993, when it stood at 71.9. Then as now, the economy was recovering from a recession, but the labor market was still shaky.
"Recovery in the labor market is the key to consumer confidence," said Lynn Franco of the Conference Board's Consumer Research Center.
Franco said the threat of military action in Iraq and the prolonged bear market also took their toll on consumer's view of the economy.
The Conference Board's index is based on a monthly survey of about 5,000 U.S. households.