Stocks plunge on terror concerns
By Michael J. Martinez
Associated Press
NEW YORK — Investors increasingly worried about terrorism extended Wall Street's sharp decline into another week yesterday, 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 sinking below 10,000 for the first time since Dec. 12 after Israeli troops killed the spiritual leader of the Palestinian group Hamas early yesterday.
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 also was 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."
The Dow Jones industrial average finished the session down 121.85, or 1.2 percent, at 10,064.75. The index fell as low as 10,012.23 in afternoon trading. The Dow came 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.
Broader stock indicators also were sharply lower.
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 after downgrades from brokerage houses worried 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 likely will need a string of better-than-expected economic data and earnings to pull out of the correction that has kept the major indexes down for the past few weeks.
Sam Stovall, senior investment strategist at Standard & Poor's, said the firm still expects an 11 percent increase on the S&P by the end of the year. Interest rates remain at near-historic lows and first-quarter corporate profits are expected to beat analysts' expectations, Stovall said.
Some analysts were looking forward to Thursday's gross domestic product figure and first-time jobless claims, 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 selloff.
Declining issues outnumbered advancers by almost 4 to 1 on the New York Stock Exchange, where consolidated volume came to 1.83 billion shares, compared to 1.80 billion on Friday. The Russell 2000 index dropped 11.75, or 2.1 percent, to 558.99.
Newsday contributed to this report.
