Spain vote fallout sends stocks sliding
By Michael J. Martinez
Associated Press
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| Traders at the stock exchange in Frankfurt, Germany, yesterday commemorated the victims of Thursday's bomb blasts in Madrid, Spain. In the United States, the Dow fell more than 100 points for the third time in four sessions.
Bloomberg News Service |
"The Spain elections certainly have some ramifications on the war on terror, and the political implications aren't great for the U.S.," said Jay Suskind, head trader at Ryan Beck & Co. "Put that together with the lousy week we had last week, and there's not much confidence in buying."
Last week's selloff brought an end to the market's yearlong rally, which had started to taper off in mid-February. Resumption of the rally is unlikely for some time, said Russ Koesterich, U.S. equity strategist for State Street Corp.
"There's been a big reduction in risk appetite over the past few months, and investors are becoming very critical," Koesterich said. "The market has discounted a lot of good news, and there's limited upside ahead. That doesn't mean you should get out of the market, but the easy money's behind us."
The Dow fell 137.19, or 1.3 percent, to 10,102.89, its biggest drop since the 160.07 it lost March 10.
Broader stock indicators were also markedly lower. The Standard & Poor's 500 index was down 16.08, or 1.4 percent, at 1,104.49, and the Nasdaq composite index dropped 45.53, or 2.3 percent, to 1,939.20, the biggest drop since Feb. 4.
The Dow and Nasdaq were at their lowest levels since mid-December, while the S&P 500 was at its lowest level since late December.
Yesterday's session marked the third time in four sessions that the Dow fell more than 100 points, a common occurrence during the bear market but one that Wall Street has not been used to since stocks began their ascent a year ago. Since peaking at 10,737.70 on Feb. 17, the Dow has lost nearly 635 points, or nearly 6 percent.
While analysts had been expecting the market to go through some kind of correction, and prices were in the process of consolidating, the reawakening of terrorism fears has made it clear that Wall Street is in at least a temporary downturn.
Even positive economic news didn't help yesterday. Industrial production rose by a better-than-expected 0.7 percent in February, a sign that manufacturers may finally regain ground after lagging in the overall economic recovery. Some economists had feared a drop-off after January's 0.8 percent rise.
Investors also held back on buying before today's Federal Reserve meeting. The Fed is expected to give a clearer picture on whether interest rates would remain steady for the long term.
"If the Fed comes out with a really optimistic statement, that could help things," Suskind said. "But even that might not be enough. Long term, things look pretty good, and we should get some good pre-announcement on earnings. But short term, there's a lot of concern out there."
Microsoft slipped 22 cents to $25.16 after the European Commission took another step closer to finding that Microsoft Corp. unfairly abused its monopoly power with its Windows operating systems. A final ruling could come as early as next week unless the company and regulators reach a settlement.
General Electric Co. fell 30 cents to $30.30 after it announced it would buy bomb-detection company InVision Technologies Inc. for $900 million in cash. InVision jumped $8.13, or 20 percent, to $49.35.
ImClone Systems Inc., narrowed its losses from a year ago but still missed Wall Street estimates by 3 cents. ImClone, the stock at the center of the Martha Stewart conviction, dropped $1.19 to $45.32.
Martha Stewart Living Omnimedia Inc. was down 36 cents at $9.97 after the company announced that Stewart gave up her seat on the board of directors and resigned as chief creative officer.
Nortel Networks Corp. announced it's putting the company's chief financial officer and its comptroller on paid leave as the board of directors investigates Nortel's 2003 earnings statements. Nortel fell $1.19 to $5.24.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 2.02 billion shares, compared with 1.76 billion on Friday.
The Russell 2000 index of smaller companies fell 15.89, or 2.7 percent, to 566.95.
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