Indexes Retreat on Terror Fears
Wall Street retreated Thursday as a wave of terrorist attacks continued in Turkey with the bombings of the HSBC bank offices and the British consulate. Upbeat reports on employment and the economy helped limit the market’s losses.
The Dow Jones industrial average fell in early trading, then was up as much as 35 points, before pulling back again late in the day. Though the economy is improving, analysts say renewed geopolitical uncertainty could keep investors from making major commitments to stocks.
“Investors are very nervous about continued terrorist activity, but at the same time, they are showing more confidence in the economy and the equity market,” said Peter Dunay, chief market strategist at Wall Street Access.
The Dow closed down 71.04 points, or 0.7%, at 9,619.42 and has lost ground in 11 of the last 13 trading sessions.
The Nasdaq composite index fell 17.73 points, or 0.9%, to 1,881.92, and the Standard & Poor’s 500 index declined 8.79 points, or 0.8%, to 1,033.65.
Losers led winners by 8 to 5 on the New York Stock Exchange and by 3 to 2 on Nasdaq. Trading was moderate.
In Istanbul, Turkey, two truck bombs exploded outside London-based HSBC and the British consulate, killing at least 25 people and wounding nearly 400. The explosions, which came during President Bush’s trip to Britain, were blamed on the Al Qaeda terrorist network.
Until this week, terrorism had receded as a factor in stock trading, but the bombings of two synagogues in Turkey over the weekend and Thursday’s attacks reminded markets around the world of the danger that terrorist organizations still pose.
Perhaps adding to the uneasiness on Wall Street was the brief evacuation of the White House after birds or possibly atmosphere disturbances triggered a false radar reading, which initially was thought to be an unauthorized plane flying near the White House.
But the economic news mostly lent support to the market and enabled the major indexes to move briefly into positive ground.
The Labor Department reported that new jobless claims fell more than expected this week. It marked the seventh straight week that claims have been below the 400,000 level, which is associated with a weak job market.
And the Conference Board said its index of leading economic indicators, the widely watched economic forecasting gauge, increased 0.4% last month compared with a flat reading in September, again beating analysts’ forecasts.
“It’s all about the unrest as far as the terrorism,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “It’s given people the excuse to stay away” from the market.
He added that many investors, nervous that stock valuations might be a bit high after several months of advances, are being cautious to make sure they can end the year with gains.
Global uncertainty boosted Treasury bonds, often seen as a haven in times of uncertainty. The yield on the benchmark 10-year T-note, which moves in the opposite direction of its price, fell to 4.15% from Wednesday’s close of 4.24%.
Gold, another traditional haven, didn’t fare as well, losing $1.20 to $393.70 an ounce in New York futures trading. The dollar sank against the yen and euro but avoided the recent lows it hit against both currencies.
In other highlights:
* U.S.-traded shares of HSBC Holdings, parent of HSBC bank, fell $1.58 to $72.92 after the bombings in Turkey.
* Some defense stocks rallied. Northrop Grumman gained 91 cents to $92.78, United Defense rose 72 cents to $32.93, Anteon International jumped 85 cents to $36.80 and Heico surged 90 cents to $16.50.
* Schering-Plough fell 72 cents to $15.28 after the drug company said its Polish subsidiary was being investigated by federal regulators.
* Hewlett-Packard declined 75 cents to $21.59 even though the computer company posted a doubling of quarterly profit that beat analysts’ expectations.
Also in the tech sector, semiconductor stocks were mostly lower. The SOX chip stock index slid 2.1%. It is down 6.6% from its 52-week high reached last week.
