Dow Average Slips Below 8,000 Mark
Wall Street stumbled Thursday and the dollar fell as gloomy economic data and ongoing fears of war in Iraq weighed on investors’ mood.
In other trading, oil prices dipped while gold rose.
Some investors were rattled by news of a record U.S. trade deficit and data showing unexpectedly high wholesale price inflation in January.
The Dow industrials fell 85.64 points, or 1.1%, to 7,914.96.
But the broader market’s losses were limited. Falling stocks outnumbered winners by a slim margin of 17 to 15 on the New York Stock Exchange, and winners had a slight edge on Nasdaq. Trading volume remained muted.
The Nasdaq composite index eased 3.09 points, or 0.2%, to 1,331.23.
Stocks were hampered by a trio of reports that painted a grim economic picture: a jump in the U.S. producer price index in January was the sharpest in more than a decade, thanks in part to rising energy prices; the U.S. trade deficit ballooned to a record $44.2 billion in December; and 402,000 Americans filed for first-time unemployment benefits in the latest week.
Also hurting investor sentiment was a Federal Reserve Bank of Philadelphia report showing a worse-than-expected drop in business conditions. The report pointed to a sharp manufacturing slowdown in the mid-Atlantic region, and dampened prospects for a rebound at factories nationwide.
“In general, the economic numbers were on the weak side, which is weighing on the market,” said Andrew Baker, a senior Nasdaq trader at L.A. investment bank Wedbush Morgan. “People are reluctant to put on big trading or investment positions with all the continued tension with Iraq and the rest of the world.”
Stocks took a turn for the worse after a U.S. official said Washington would present a new United Nations resolution next week declaring Iraq in “further material breach” of a Security Council resolution ordering Baghdad to disarm. The new resolution raises the prospect of war soon.
In New York, near-month crude oil futures contracts slipped 37 cents to $36.79 a barrel after a weekly report of U.S. crude inventories showed a surprising rise in supplies.
But oil, which topped $37 a barrel Wednesday, is still up about 40% from mid-November levels, reflecting the “war premium” stemming from worries that a U.S.-led military strike against Iraq could choke off supplies from the Gulf region.
Gold, meanwhile, jumped $3.20 to settle at $353.10 an ounce in New York. The metal, a classic inflation hedge, may have been helped by the inflation report, analysts said.
Treasury bond yields ended lower for a third straight day. The 10-year T-note yield fell to 3.87% from 3.88% Wednesday.
Among Thursday’s highlights:
* SBC Communications hurt the Dow. The stock dropped $1.73 to $21.30 after federal regulators approved new rules that quashed local phone companies’ hopes for relief from requirements that they lease part of their networks to rivals at deep discounts. Verizon Communications fell $1.84 to $34.76 and BellSouth sank $1.54 to $20.60.
* San Diego-based Titan plummeted as much as 35% after the military communications products maker said its president and chief operating officer would leave the company in mid-March to pursue other interests. Titan shares slid $3.20 to $8.02 after hitting a fresh 52-week low of $7.30.
* Biogen slid $3.20 to $34.96 after the biotech firm said European regulators rejected its application for approval of its psoriasis drug and requested more information on the proposed treatment.
* On the plus side, Collins & Aikman, an auto parts supplier, rose 14%, or 49 cents, to $3.95 after it reported a narrower quarterly net loss due to acquisitions and consolidated operations.
Market Roundup, C7-8
