Blue Chips Near a 5-Month Low
Blue-chip stocks closed Tuesday at their lowest in almost five months as investors continued to fret that slack consumer spending would hurt an economy struggling under the threat of war.
“There’s some fear, outside of the geopolitical sphere, that there are still some fundamental problems within the economy,” said Charles Payne, analyst at Wall Street Strategies. “Businesses really aren’t spending or investing, and that creates a serious problem as it appears the consumer finally is running out of steam.”
Meanwhile, the dollar tumbled to a four-year low against the euro in late trading on signs that the U.S. government is in no hurry to defend the weak greenback. And gold and oil firmed on heightening war fears.
The Dow Jones industrial average slid 132.99 points, or 1.7%, to 7,704.87 -- its lowest close since Oct. 10.
The Standard & Poor’s 500 index dropped 12.82 points, or 1.5%, to 821.99.
The technology-heavy Nasdaq composite index fared better, losing 12.52 points, or 1%, to 1,307.77.
Losers outnumbered winners by more than 3 to 2 on the New York Stock Exchange and Nasdaq in moderate trading.
Among consumer-oriented stocks, General Motors skidded almost 6%, off $1.89 to $31.27, after U.S. car sales fell for a second month in February.
Home Depot, the biggest home improvement retailer, fell 99 cents to $22.10 after Federal Reserve Chairman Alan Greenspan warned that the housing boom may slow. Both GM and Home Depot are Dow members.
Investors fear that an attack on Iraq will hamper the already fragile U.S. economic recovery. The United States ordered 60,000 more troops to the Persian Gulf, sparking speculation among traders that war is imminent.
“Investment decisions have been put off for the last six or nine months, but now that we literally could be on the brink of military action, people are being very hesitant to commit,” said Mike Driscoll, a trader at Bear Stearns. “It’s Iraq around the clock.”
In addition, a powerful bomb blast at an airport in the Philippines that killed 19 people and wounded 144 gave the market an early scare as yet another reminder of the fear that has sidelined investors for months.
The dollar, after holding steady against the euro for much of the day, fell sharply in late trading after Treasury Secretary John W. Snow told reporters after a hearing in Washington: “I’m not particularly concerned” about the dollar, and that “the dollar is going to rise and fall.”
The euro’s value surged to $1.092 from $1.089 on Monday, and now is the highest since early 1999. The dollar was little changed against the yen.
In commodities trading in New York, near-term oil futures rose $1.01 to $36.89 a barrel, and gold added $4 to $353.20 an ounce on war speculation.
The same worries pushed government bond yields lower. The yield on the benchmark 10-year Treasury note fell to 3.65% from Monday’s close of 3.68%.
In other highlights:
* Adding to the auto sector’s woes, Deutsche Bank downgraded GM and Ford Motor to “sell” from “hold” on concerns about a prolonged decline in demand for U.S. autos. The investment bank also said it has downgraded automotive parts suppliers Delphi and Visteon.
Ford lost 33 cents to $7.74, Delphi tumbled 62 cents to $7.08 and Visteon fell 49 cents to $5.78. Also, DaimlerChrysler was down $1.25 to $29.28.
* Among consumer-related stocks falling on spending concerns, Nike dropped $1.02 to $45.66, Fortune Brands lost $1.42 to $41.66 and Hershey Foods fell $1.80 to $62.90.
* European markets were broadly lower. Key share indexes fell 1.6% in Britain, 3.1% in France and 1.9% in Germany.
Market Roundup, C5, C7
