Dow Takes a Tumble--Down 43.32
Worries that war in the Middle East may be edging closer and concern the economy is even more fragile than previously feared sent blue chip stocks sharply lower today.
As bond prices tumbled and oil moved higher, stocks slumped 1.69%, with the Dow Jones average of 30 industrials closing down 43.32 at 2,522.77.
In the broader market, losers outpaced gainers by a wide 4-1 margin on New York Stock Exchange volume of 130.61 million shares.
Analysts said traders were edgy about diplomatic prospects in the Middle East as Secretary of State James A. Baker III prepares to meet Wednesday with Iraq’s foreign minister, Tarik Aziz.
“The market’s being held hostage by the gulf deadline,” said David Holt, director of research at Wedbush Morgan Securities, referring to the Jan. 15 U.N. deadline for Iraq to leave Kuwait. “Until then, the market’s not going to do anything (positive).”
Holt said investors do not expect a peaceful resolution to emerge from Wednesday’s meeting between Baker and Aziz. “Everyone’s a realist in this matter. Nothing can come from this meeting,” he said.
“The question is whether we’re going to war,” said Stephen Berman of County NatWest USA. “A breakout of war in the Mideast raises fears about the U.S. economy and affects consumer confidence, which has an indirect bearing on banking stocks.”
News of the takeover of the Bank of New England by government regulators pressured stocks in the banking sector, analysts said. Fearing more trouble ahead, investors sold off bank shares, they said.
“The market itself has been weak. People are looking around saying, ‘What’s the next one?’ and ‘Will it happen again?’ ” said Provident National Bank analyst Charles Vincent.
Among the bank stocks, Citicorp fell 3/8 to 13 an hour before the close; Manufacturers Hanover 7/8 to 20 3/8; Chemical Banking 3/8 to 11; BankAmerica 5/8 to 25 3/8, and Chase Manhattan 1/4 to 10 5/8.
Student Loan Marketing Assn. ranked among the volume leaders, down 3 1/2 at 44 5/8. The New York Times reported that the Bush Administration was considering changes in student loan programs that would put greater emphasis on direct lending by the government.
Losers among the blue chips included Philip Morris, down 5/8 at 48 3/4; American Telephone & Telegraph, down 1/8 at 29 7/8; International Business Machines, down 1 3/8 at 110 3/4, and Merck, down 2 1/4 at 83.
