War, Terrorism Fears Pull Indexes to 4-Month Lows
Wall Street suffered another broad decline Wednesday, driving key indexes to four-month lows, as war and terrorism fears left many investors frozen in place.
Crude oil prices hit two-year highs. But gold, which had been a big winner on concerns about a U.S.-Iraq conflict, plummeted as speculators bailed out even though rhetoric between the two enemies continues to sharpen.
On Wall Street the Dow Jones industrials slid 84.94 points, or 1.1%, to 7,758.17, closing near the low for the session.
The Nasdaq composite index dropped 16.49 points, or 1.3%, to 1,278.97.
The Dow is at its lowest level since Oct. 10, when the index surged 247 points to 7,533 from the previous day’s five-year closing low of 7,286.27.
The Nasdaq index is at its lowest since Oct. 17.
Losers topped winners by more than 2 to 1 on the New York Stock Exchange and on Nasdaq. But trading volume remained restrained -- indicating that the market’s decline of the last two weeks stems more from a move by many investors to the sidelines, not wholesale selling, analysts said.
“No one is willing to commit themselves.... It is a market that is drifting and drifting one way only, and that is down,” said Peter Cardillo, chief strategist of Global Partners Securities Inc.
Wall Street has been stymied by continuing worries that a war would undermine an already fragile economy.
Investors’ concerns about the economy increased Wednesday after Federal Reserve Chairman Alan Greenspan, testifying before Congress, again questioned the wisdom of the Bush administration’s proposed tax cuts amid mounting budget deficits.
Market bulls have argued that corporate earnings are improving and that many stocks are cheap. But with the war threat, “Main Street investors remain extremely risk averse, and that has manifest itself in a lack of money going into the equity market,” said Ned Riley, chief investment strategist at State Street Global Advisors.
In commodities trading, near-term gold futures prices in New York continued to sink from last week’s six-year high. February futures dropped $9.90 to $352.60 an ounce. The price peaked last week at $379.
“There have been people expecting that a war would have happened by now, and these are the people who are now selling,” William O’Neill, a commodity consultant and former head of futures research at Merrill Lynch & Co. in New York, told Bloomberg News.
Crude oil prices, however, rose again on fears that already tight supplies would become more worrisome if war broke out. Near-term oil futures in New York added 33 cents to $35.77 a barrel, a 28-month high.
U.S. oil inventories fell 4.5 million barrels to 269.8 million barrels in the week ended Feb. 7, the lowest level since 1975, the Energy Department reported.
“Supplies are incredibly low,” Peter Beutel, president of Cameron Hanover Inc., an oil and gas consulting firm in New Canaan, Conn., told Bloomberg News.
In the Treasury bond market, yields fell as the government got a better reception for its sale of 10-year notes than for its five-year note sale Tuesday. The 10-year notes were sold at a yield of 3.96%. The yield slid to 3.91% after the auction.
Among the day’s highlights:
* Gold mining stocks fell sharply, with Placer Dome down 66 cents to $10.48 and Newmont Mining down $1.40 to $27.10. Barrick Gold dropped 78 cents to $15.70 after the firm fired its chief executive after a string of mine production problems.
* Utility stocks were hammered again. Duke Energy fell $1.21 to $13.96 and TXU slid 74 cents to $15.41.
* On the plus side, some investors sought consumer products stocks. Clorox gained 59 cents to $41, Procter & Gamble added 13 cents to $83.32 and Gillette was up 63 cents to $28.71.
Market Roundup, C7-8
