Posted at 12:13 p.m., Monday, March 22, 2004
Stocks drop as terrorism worries take big toll
Associated PressNEW YORK — Investors increasingly worried about terrorism extended Wall Street’s sharp decline into another week today, selling stocks across the market and giving the Dow Jones industrials their fifth triple-digit drop in the past nine sessions.
The blue chips came close to breaching 10,000 for the first time since Dec. 12 after Israeli troops killed the leader of the Palestinian group Hamas early today. Hamas has promised retaliation against both Israel and the United States.
The turbulence in the Middle East discouraged equity investors already uneasy about a slow economic recovery and tepid job growth. Wall Street was also worried about decreased consumer spending because of rising oil prices.
"The geopolitical situation is dominating the markets, but it’s a very strange thing because there’s no way to quantify it," said Peter Dunay, chief market strategist at Wall Street Access. "It definitely puts investors on edge. They’ve already factored in a lot of future positives, and when that’s threatened, they react."
According to preliminary calculations, the Dow Jones industrial average was down 121.85, or 1.2 percent, at 10,064.75. The Dow was coming off a 53.48 loss last week, and has lost 672.95, or 6.3 percent, since its recent high of 10,737.70 on Feb. 17. The index fell as low as 10,012.23 in afternoon trading.
Broader indicators also were sharply lower. The Standard & Poor’s 500 index fell 14.34, or 1.3 percent, to 1,095.44, closing below the 1,100 mark for the first time since Dec. 26. The Nasdaq composite index was down 30.56, or 1.6 percent, at 1,909.91. The Nasdaq has fallen eight of the last nine weeks. It last closed below 1,900 Nov. 21.
The declines cut across every sector, with technology shares particularly hard hit because of the turmoil over the presidential election in Taiwan, where some of the strongest technology manufacturers are based. Airlines stocks also fell sharply because of downgrades from brokerage houses, worries about a drop in travel because of terrorism and rising fuel prices.
With no major economic news due until week’s end and first-quarter earnings still a month away, the markets were particularly susceptible to bad news abroad. Corporate fundamentals and the underlying economy remain solid, but investors will likely need a string of better-than-expected economic data and earnings to pull out of the correction that kept the major indexes down for the past few weeks.
"Today it’s terrorism, yesterday it might it have been oil prices," said Hugh Johnson, chief investment officer at First Albany Corp. "Every day now, there’s a reason to worry that forecasts for the economy and earnings are just too optimistic, and tomorrow it’s going to be something else."
Some analysts were looking forward to Thursday’s gross domestic product figure and first-time jobless claims reports, hoping to find reasons to remain bullish about the economy. A report on payroll growth, due April 2, could be pivotal in shoring up shares — or causing another dropoff.
"If we get any evidence job growth is picking up, that’ll make people a lot better," said Chip Dickson, equities analyst with Lehman Brothers. "Until then, I don’t expect a lot of conviction in this market either way."
Individual companies have attracted interest, however. Apple Computer Co. was upgraded from "neutral" to "buy" by FTN Midwest, citing strong computer and digital music player sales. Apple ended the session unchanged at $25.86.
Retail chain Walgreen Co. dropped 75 cents to $32.76 after posting earnings a penny per share short of Wall Street expectations.
Cruise-ship line Carnival Corp. reported earnings, beating analysts’ estimates by 3 cents a share. Carnival fell 48 cents to $42.03.
Wal-Mart Stores reported March sales would come in at the high range of forecasts, but its shares fell 50 cents to $58.10.
Cancer-care services provider U.S. Oncology Inc. jumped $2.44, or 19 percent, to $15.14 after it said it will be acquired by private equity firm Welsh Carson Anderson & Stowe for $1.7 billion. The deal was expected to be completed by the second quarter.
Declining issues outnumbered advancers by nearly 4 to 1 on the New York Stock Exchange, where volume was light.
The Russell 2000 index of smaller companies dropped 11.75, or 2.1 percent, to 558.99.
Political concerns dragged on overseas markets as well. Japan’s Nikkei average dropped 0.9 percent because of Taiwan’s election controversy. Europe’s markets fell on terrorism worries. Britain’s FTSE 100 closed down 1.9 percent, France’s CAC-40 fell 2.1 percent for the day and Germany’s DAX index plunged 2.4 percent.