Stocks fall on reports from Syria, Iraq

By Michael J. Martinez
Associated Press

Traders working the New York Stock Exchange floor yesterday observed a selloff of stocks, despite healthy earnings reports from The Boeing Co., Comcast and others. Associated Press

The growing possibility of higher interest rates has made investors inclined to pull money out of the market, analysts said. Developments in the Middle East further unnerved them.

The Dow dropped 135.56 to 10,342.60. Broader stock indicators also fell. The Standard & Poor's 500 index was down 15.70 at 1,122.41, and the Nasdaq composite index fell 42.99 to 1,989.54.

An attack in Syria that killed four people Tuesday and continuing violence in Fallujah, Iraq, intensified the mood.

Investors have been largely obsessed with the prospect of higher interest rates, selling on positive economic news. Many have ignored companies' strong earnings and focused on uncertainty instead.

The overseas news had a greater impact yesterday because there was no fresh economic news to help investors assess the speed of the economic recovery. Many investors held firm or sold off ahead of three key reports coming in over the next week. The first-quarter gross domestic product report is due out today, the Federal Reserve is to meet Tuesday to discuss rates, and April employment data is expected next Friday.

"If the data shows that the economy is heating up too quickly, that'll prompt the Fed to raise rates more quickly and more forcefully than investors would like," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "So right now, when things are as good as they can be, and earnings are strong as they are now, that's the time you want to be cautious and take a contrarian viewpoint."

The selloff yesterday hit nearly every sector, with only utilities posting modest gains.

The Boeing Co. posted a first-quarter profit, led by growth in its defense business. The company, whose stock climbed 48 cents to $44.03, also upped its annual earnings forecasts based on an expected increase in commercial aircraft deliveries.

Comcast Corp. executives said a lack of interest from the The Walt Disney Co.'s board led Comcast to drop its bid for the entertainment conglomerate. Comcast also posted earnings of 3 cents per share for the quarter. Comcast was up 23 cents at $30.20, while Disney dropped 23 cents to $23.95.

Pharmaceutical company Bristol-Myers Squibb rose 76 cents to $25.48 as it reported earnings that beat expectations by 2 cents.

McDonald's posted a 56 percent increase in earnings from a year ago, meeting Wall Street expectations. McDonald's gained 41 cents to $27.61.

Nortel Networks Corp. was down $1.60, or 28 percent, at $4.04 after it fired its chief executive, chief financial officer and comptroller in an accounting scandal. The company's first quarter earnings will be delayed, and it will also review and possibly restate its 2003 earnings as well.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 2.46 billion shares, compared with 1.92 billion at the same point Tuesday.

The Russell 2000 index of smaller companies fell 13.70, or 2.3 percent, to 577.06.