Terror act, economic forecast hurt stocks
By Meg Richards
Associated Press
NEW YORK — Edgy investors sent stocks skidding today as a terrorist attack in Madrid overshadowed mostly good economic news and bullish forecasts from several companies. The Dow Jones industrial average nosedived nearly 170 points, giving it a two-day drop of 328.
The Spanish government initially blamed Basque separatists for the worst terrorist strike in the nation's history. But police later found a van with detonators and an audiotape of Quranic verses near the site, and a London-based Arabic newspaper said it had received a claim of responsibility in the name of al-Qaida. The late-day development caused U.S. markets to shudder.
According to preliminary calculations, the Dow Jones industrial average sank 168.51, or 1.6 percent, to 10,128.38, leaving it down more than 3 percent for the year. The swings in the index of 30 actively traded industrial stocks came a day after it plunged 160.07 as investors became increasingly fearful that a long-forecast correction was under way.
Since Monday, the Dow has lost 467.17 points.
The broader market also dropped sharply. The Nasdaq composite index lost 20.26, or 1 percent, to 1,943.89, down almost 3 percent for the year. The Standard & Poor's 500 index was down 17.13, or 1.5 percent, at 1,106.76, a 0.5 percent loss since the start of 2004.
"This has been quite a day," said Michael J. Cuggino, president and manager of the Permanent Portfolio Fund. "This is why you need to be exposed to a lot of different asset classes that can protect you from the different scenarios that come up in a volatile global political climate."
The possible link between al-Qaida and the bombings in Spain reawakened fears of terrorism on Wall Street that have largely been dormant for months. The attacks shook a market already uncertain about the job market and the strength of the economic recovery.
It was still unclear who was responsible for the massive attack in Spain, in which 10 bombs along a rail line killed 190 people and injured 1,200 others at the height of rush hours. With the country's general election just days away, Spanish officials initially blamed the Basque separatist group ETA, but the evidence found in the truck and the claim reported in London made the situation more murky.
Beyond the terrorism concerns, the market's own dynamics were causing concern among analysts. Usually solid performers were lagging the tech-heavy Nasdaq, the most volatile gauge in recent months.
National Semiconductor was up $1.36 at $39.56 after posting quarterly profits that beat expectations on strong sales in the personal computing and wireless markets. The news offered some short-term support for tech shares; computer maker Dell Inc. was up 68 cents at $32.22, but chip-maker Texas Instruments was down 26 cents at $29.42 after an earlier rise.
The market gyrations prompted investors to seek safer positions, and some of the more economically sensitive basic materials stocks that saw the steepest losses in the previous session rebounded. On the Dow, Alcoa Inc. was up 47 cents at $34.67.
