War fears, auto slump send Dow down 132.99
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By Hope Yen
Associated Press
NEW YORK — Renewed fears about war and terrorism tormented Wall Street today, sending the Dow Jones industrials to their lowest level in nearly five months.
Analysts said skittish investors unloaded stocks in response to a bomb blast in the Philippines and concerns about a U.S.-led attack on Iraq. Auto stocks sagged on downgrades of General Motors and Ford.
"We had disappointing news in the autos and generally we had more disappointing news on corporate profitability," said Stephen Massocca, president of Pacific Growth Equities. "That coupled with continued concerns over Iraq continues to weigh on the market."
The Dow fell 132.99, or 1.7 percent, to close at 7,704.87, having declined 53 points Monday. It was the lowest level seen since Oct. 10, when blue-chip stocks finished at 7,533.95.
The broader market also finished lower. The Nasdaq composite index lost 12.53, or 1 percent, to 1,307.76. The Standard & Poor's 500 index dropped 12.82, or 1.5 percent, to 821.99.
The explosion today of a powerful bomb in a backpack at a Philippines airport exacerbated an already tense mood on Wall Street. Analysts say investors have been unwilling to commit to stocks on fears of a possible war with Iraq that could threaten a fragile economic recovery.
"It's the war and terrorism," said Barry Berman, head trader at Robert W. Baird & Co. in Milwaukee. "In order for the market to take a longer-term trend to the upside, people are going to have to have a better sense of what the prospects are for stocks."
The White House plans to push for a vote next week on its U.N. resolution authorizing war in Iraq. Saddam Hussein's government continued to destroy banned missiles in a bid to stave off an armed conflict.
U.N. Secretary-General Kofi Annan declared today that war must be a last resort and Russia indicated it might veto the U.S.-backed resolution, raising investor concerns that the United States might act unilaterally.
Homebuilders took a hit after Federal Reserve chairman Alan Greenspan said surging housing sales, one of the economy's few bright spots, might lose momentum this year. Lennar dropped $3.91 to $50.55, and Pulte Homes fell $3.90 to $46.80.
General Motors dropped $1.89 to $31.27 and Ford Motor lost 33 cents to $7.74 after Deutsche Bank lowered their stock ratings to "sell" from "hold," citing concerns of falling demand.
Ahold slid 43 cents to $3.63 after saying it had received subpoenas from the U.S. Justice Department amid questions about possible accounting irregularities at the global supermarket chain.
Gainers included EchoStar Communications, which rose $1.70 to $27.65, even though the nation's second biggest satellite TV company posted a $716 million fourth-quarter loss, citing charges from its failed merger plans with Hughes Electronics.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Volume was light.
