NEW YORK >> Investors perturbed by the government's latest gross domestic product report sent stocks sliding sharply lower today, halting a two-day rally. The Dow Jones industrials dropped more than 160 points, giving the blue chips a two-week loss of nearly 900 points. GDP report sinks stocks
By Amy Baldwin
Associated PressThe sell-off wasn't surprising as the GDP news confirmed investors' fears about a frail economy. But the larger issue was the market's concern that a war with Iraq would further suppress an already weak economic recovery.
"That's at the top of the anxiety list for investors," said David Sowerby, chief market analyst at Loomis, Sayles & Co. in Detroit.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange, where trading volume was light.
The Dow closed down 165.58, or 2 percent, at 7,945.13. The Dow more than wiped out a gain of 121.15 from the previous two sessions, its first multiple-day winning streak in two weeks. The blue chip average closed back below the 8,000 level, as it did Monday for the first time in three months.
The broader market also fell sharply. The Nasdaq composite index sank 35.70, or 2.6 percent, to 1,322.36. The Standard & Poor's 500 index slid 19.74, or 2.3 percent, to 844.62.
All three indexes suffered their eighth decline in 11 sessions. For the Dow, all but one of its eight losing sessions resulted in a triple-digit loss. Over the past 11 sessions, the Dow has plummeted 897.49.
The Russell 2000 index fell 7.22, or 1.9 percent, to 367.62.
The price of the Treasury's 10-year note was up 3/8 point, while its yield fell to 3.97 percent from 4.02 percent yesterday. Two-year Treasury notes were up 3/32 point, while their yield fell to 1.64 percent from 1.71 percent yesterday.
Investors were disheartened today by news that the economy grew at an incredibly slow pace in the fourth quarter. The Commerce Department reported that the economy as measured by the gross domestic product grew at an annual rate of just 0.7 percent in the final three months of 2002 as consumers buckled in the face of war worries, a third year of stock market declines and a dismal job climate.
The GDP performance missed analysts expectations for a 0.9 percent increase and was a big decrease from the 4 percent growth rate registered in the third quarter.
But analysts said investors are more concerned about the prospects of war with Iraq than economic data that they already expect to be dismal.
AOL Time Warner fell $1.96 to $12 after announcing late yesterday it lost $44.9 billion, or $10.04 a share, in the fourth quarter. But after a $45.5 billion charge to account for the media giant's plummeting value, AOL met expectations with earnings of 28 cents a share. The company also announced that vice chairman Ted Turner was stepping down.
But CSX rose 88 cents to $27.63 on fourth-quarter earnings that beat Wall Street's forecast by 7 cents a share.
Japan's Nikkei stock average finished down 0.2 percent. In Europe, France's CAC-40 climbed 2.6 percent, Britain's FTSE 100 rose 2.7 percent, and Germany's DAX index fell 0.5 percent.
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