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NEW YORK -- The Dow Jones industrial average plunged nearly 380 points today while the Nasdaq composite index recorded its lowest close this year, as jittery investors reacted to the escalating violence in the Middle East. Mideast upheaval
cuts Dow by
379 pointsNasdaq loses 94 to its lowest
Bonds rally Associated Press
close of the year as investors
worry about higher oil pricesStocks already in a steady fall nosedived, pushing the Dow to its fifth-largest largest point loss ever, buffeted by rising oil prices on top of persistent fears about corporate profits, including an earnings warnings from stalwart Home Depot.
The Dow closed down 379.21 at 10,034.58, a 3.6 percent decline. Broader markets were also lower. The Nasdaq composite was down 93.81, or nearly 3 percent, to 3,074.68 -- its lowest close of 2000. The Standard & Poor's 500 index was off 34.81, or 2.6 percent, to 1,329.78.
"In an already nervous market, this is all we didn't need," said Al Goldman, an analyst with A.G. Edwards & Sons Inc. in St. Louis. "A terrorist attack, increased hostilities in the Middle East and a spike in oil prices -- shake it all up and you get blind dumping of stocks."
The apparent terrorist attack on a U.S. military ship in Yemen early in the day sent oil prices up as much as 10 percent, helping to re-ignite inflation fears. And Israeli combat helicopters rocketed Palestinian leader Yasser Arafat's residential compound in the Gaza Strip as well as a West Bank town in retaliation for the brutal killing of three Israeli soldiers by a Palestinian mob.
Oil prices were as high as $37.00 a barrel at one point on the New York Mercantile Exchange, approaching its recent 10-year high of $37.80 a barrel hit last month. In afternoon trading, crude futures were at $36.10.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, with 2,136 down, 765 up and 422 unchanged. NYSE volume came to 1.37 billion shares, vs. 1.38 billion yesterday.
The NYSE composite fell 16.30 to 624.12; the American Stock Exchange index dropped 2.14 to 913.41; and the Russell 2000 index lost 11.77 at 462.97.
Meanwhile, shares of Home Depot, the nation's largest home improvement retailer, plunged $13.94, or 28 percent, to $35 after it warned of lower-than-expected earnings because of material costs and other factors.
The news sent other retailers down as well, including Wal-Mart, which fell $1.19 to $44.13. Financial stocks, which tend to be sensitive to inflation fears, suffered as well; J.P. Morgan, which is also a Dow component, fell $10.38 to $136.44.
Fears that higher oil costs would hurt airlines sent Continental Airlines down $2.81 at $41.13. Airplane manufacturer Boeing fell $4.06 to $56.13.
Technology stocks were mixed. Advanced Micro Devices rose 31 cents to $22.13 after reporting earnings ahead of Wall Street expectations. But Yahoo tumbled again on worries about future earnings, falling $8.75 to $56.63.
NEW YORK -- Treasury notes rebounded on reports of escalating tension in the Middle East, sending investors and traders to the safe haven of U.S. bonds. Bonds rally
Bloomberg News
In late trading, the 2-year note rose 6/32 point, or $1.88 per $1,000 face amount. Its yield dropped 7 basis points to 5.82 percent.
The five-year note climbed 14/32 point, driving its yield down 11 basis points to 5.69 percent.
The most active 10-year Treasury note rose 14/32 point as its yield fell 6 basis points to 5.71 percent.
"Tension in the Mideast is good" for notes maturing in five years or less "because of the flight to quality" during global crises, said Tony Crescenzi, bond market strategist at Miller Tabak & Co.
The 30-year bond price rose as the price of oil surged on reports Israeli helicopters fired rockets on Palestinian Authority offices in the West Bank after three Israeli soldiers were killed by a crowd of Palestinians. At least five U.S. sailors were killed and more than 30 injured in a suspected bomb attack on the USS Cole while it refueled in Aden, Yemen.
The 30-year bond price rose 5/32 point as its yield fell 1 basis point to 5.81 percent.
Oil soared about 9 percent to $36.06 a barrel on the New York Mercantile Exchange. It has climbed about 19 percent the past five days and is up 40 percent this year, stoking concerns inflation will accelerate throught the rest of the U.S. economy.
Treasury prices fell in early trading as futures trading pointed to a rebound in major U.S. stock measures. Yet, the Dow Jones Industrial Average reversed course and slumped sharply.