Markets take a pounding

  • Associated Press
  • Monday, May 17, 2004 9:00pm
  • Business

NEW YORK – Wall Street, already beset by worries about the economy and world events, skidded even lower Monday on news that the head of Iraq’s governing council had been assassinated. The Dow Jones industrial average fell more than 100 points.

Bargain hunting helped the market recover a small part of its early losses, but investors’ overall mood was one of depression. Stocks also fell on foreign exchanges in response to the violence in the Middle East and to political and economic events in India and Japan.

Uncertainty over U.S. involvement in Iraq and President Bush’s re-election chances rippled through Wall Street after Iraqi Governing Council president Izzadine Saleem died in a suicide car bombing in Baghdad that took the lives of eight others. Oil prices surged on the news, and the dollar fell against most major currencies.

“Fear is what’s dominated this market over the past month and a half, whether it’s Iraq or interest rates or inflation,” said Brian Pears, head equity trader at Victory Capital Management. “Any new violence will have a negative effect on the market.”

The Dow fell 105.96, or 1.1 percent, to 9,906.91, the lowest close for the blue chips since Dec. 5. Earlier in the session, the index fell 150.10, but it recovered somewhat as investors searched for bargains after weeks of heavy losses.

Broader stock indicators were also sharply lower. The Nasdaq composite index lost 27.61, or 1.4 percent, to 1,876.64, its lowest close since Oct. 24. Standard &Poor’s 500 index was down 11.60, or 1.1 percent, at 1,084.10, for its lowest close since Dec. 17.

Overseas, India’s main stock market index initially fell more than 15 percent Monday, the biggest drop in its 129-year history, after a leftist coalition government was elected there. After trading was stopped twice, the markets finished the session down 11.1 percent after the government ordered state-run companies to heavily buy stock.

Meanwhile, Japan’s Nikkei stock average plummeted 3.2 percent after a major bank there announced it would report a large loss for the year. In Europe, Britain’s FTSE 100 fell 0.9 percent for the session, France’s CAC-40 closed down 1.4 percent and Germany’s DAX index fell 1.3 percent.

The U.S. market appeared to find a bottom last week after a major selloff. Combined with continued investor nervousness about rising interest rates and possible inflation, however, Saleem’s death sent stocks far below their previous lows for the year.

“The market is redefining its lows,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “I thought we had hit our lows last week, keeping above Dow 10,000 and 1,900 on the Nasdaq, but with each new event in Iraq, we’ll break new lows. And the inflationary effect of these higher oil prices won’t help long-term.”

Concerns over Iraq, inflation and interest rates outweighed the latest earnings news on Wall Street. Once-struggling Kmart Holding Corp. rose $4.32 to $48.62 after it posted its second straight profitable quarter after emerging from bankruptcy. However, same-store sales, a key gauge of retail success, continued to fall.

Lowe’s Companies Inc., the nation’s second-largest home improvement retailer, beat analysts’ estimates by 3 cents per share on its quarterly earnings. Lowe’s fell 90 cents to $49.68.

Toy retailer Toys “R” Us Inc. was down 24 cents at $14.14 after it lost a penny per share more than Wall Street had expected. The company blamed inventory liquidation at its competitors for tough sales in the quarter.

Nortel Networks Corp. dropped 31 cents to $3.26 after media reports of cash bonuses to top employees prior to a March 10 warning that earnings would have to be restated for a second time. That warning sent shares falling.

Faced with the market’s increasing anxiety over a number of issues, some analysts began wondering whether the Federal Reserve should move on interest rates prior to its June meeting.

“If the Fed were to act now, it would remove some of the uncertainty and maybe let people return to focusing on fundamentals,” said Michael Murphy, head trader at Wachovia Securities. “In the short term I think this market will rally. The economy’s rolling. The numbers are still good. Moving on interest rates would let us get back to work.”

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.