Star-Bulletin news services
Terrorism fears
rattle marketsThe Dow lost nearly 170 points
and is down for the year
NEW YORK >> Edgy investors sent stocks skidding yesterday as a string of bombings in Madrid overshadowed mostly good economic news and bullish forecasts from several companies. The Dow Jones industrial average nosedived nearly 170 points, giving the blue chips their biggest four-day drop in nearly 18 months.
The Spanish government initially blamed Basque separatists for the worst terrorist strike in the nation's history. But police later found a van with detonators and an audiotape of Quranic verses near the site, and a London-based Arabic newspaper said it had received a claim of responsibility in the name of al-Qaida. The late-day development caused U.S. markets to shudder.
The Dow sank 168.51, or 1.6 percent, to 10,128.38, leaving it down 3.1 percent for the year. So far this week, the Dow has lost 467.17, giving the index its largest four-day point tumble since early October 2002, when it slid 515.95.
It was also the Dow's biggest two-day point drop since the end of January 2003, when it fell 379.91, or 4.54 percent.
The broader market also fell sharply. The Nasdaq composite index lost 20.26, or 1 percent, to 1,943.89, leaving it down nearly 3 percent for the year. The Standard & Poor's 500 index slumped 17.11, or 1.5 percent, to 1,106.78, down 0.5 percent for 2004.
All three indexes were at their lowest points since December.
The price of the Treasury's 10-year note closed up 1/32 point, while its yield fell to 3.72 percent from 3.73 percent Wednesday. Two-year Treasury notes were up116 point and yielded 1.46 percent, down from 1.51 percent Wednesday.
"This has been quite a day," said Michael J. Cuggino, president and manager of the Permanent Portfolio Fund. "This is why you need to be exposed to a lot of different asset classes that can protect you from the different scenarios that come up in a volatile global political climate."
The possible link between al-Qaida and the blasts in Spain reawakened fears of terrorism on Wall Street. The attacks further rattled investors who already had been selling for three weeks amid uncertainty about the job market and the strength of the economic recovery.
More than 190 people were killed and 1,200 others were injured when 10 bombs went off along a rail line at the height of morning rush hour in Madrid. With the country's general election just days away, Spanish officials initially blamed the Basque separatist group ETA, but the evidence found in the truck and the claim reported in London made the situation more murky.
Beyond terrorism concerns, the market's dynamics were causing worry among analysts.
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