Increasing violence in the Middle East, along with acts of terrorism and more bad earnings news, crushed the market today.
Dow Jones Industrial Average plummeted 380 points. It was crippled by
news this morning that slower sales -- from lower lumber prices -- had forced it to revise its earnings outlook downward. The stock fell 28.5%. The news rocked the retail sector and sent fellow blue-chip
and other retailers downward. The
S&P Retail Index
was down 7.7%.
The Dow's financial components also weighed heavily on it.
took away about 64 points, while
, took away a total of about 33 points.
"The bottom line is, financials do well when everything else is good," said Brad Zipper, a trader at
Herzog Heine Geduld
. "They are just going to have to suffer with all the rest."
Meanwhile, crude oil prices spiked from the renewed fighting between the Israelis and Palestinians, and also because of a suspected terrorist bombing of the U.S. Navy destroyer U.S.S. Cole. Four U.S. soldiers were killed in the incident and 11 are missing.
The U.S. is highly dependent on the OPEC nations for oil; and the political uncertainty surrounding the Middle East is provoking investors to hike oil prices. A petroleum workers' strike in Venezuela is exacerbating the situation; as that country is also a member of OPEC. November crude oil futures traded on the
New York Mercantile Exchange
were lately trading at $36.15, up from $33.25.
The increase in oil prices boosted oil sectors, but flattened transports and airline stocks. The
Dow Jones Transportation Average
was lately down 2.7%, while the
American Stock Exchange Airline Index
was 3.9% lower.
Lately, tech stocks have been the naysayers on the market -- garnering all of the investor attention -- but today, tech stocks had a little pressure taken off them on news last night of better-than-expected earnings from
Advanced Micro Devices
Applied Micro Circuits
. More importantly, there was no nasty guidance on coming quarters. Even the shares of semiconductor bellwether and AMD's primary competitor,
, were getting a lift, up 6.4%.
AMD, off 5.9%, also soothed fears of a slowdown in European demand in its conference call, saying it hadn't seen the kind of sales weakness that Intel partially blamed for its revised earnings forecast.
The aforementioned oil stocks were about the only sectors seeing green today. The
American Stock Exchange Oil & Gas Index
was rising 1.7%, while the
Philadelphia Stock Exchange Oil Service Index
was jumping 2.6%.
Also, the oil price increase was lifting the
Morgan Stanley Commodity Related Equity Index
You can tell investors are freaking out by looking at gold. The
Philadelphia Stock Exchange Gold and Silver Index
was bouncing 5.4%.
Trouble in the financial sector was pushing down the
American Stock Exchange Broker/Dealer Index
4.4%, and the
Philadelphia Stock Exchange/KBW Bank Index
4.9%. That trouble spread into the
TheStreet.com E-Finance Index
, which was 7.1% lower.
, 12.8% lower and
, off 16.5%, were a couple of its badly hit components.
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Treasuries recouped early losses and moved into positive territory following reports of escalating violence in the Middle East.
Bond and note prices starting moving sharply off their lows shortly after 9 a.m., when news services started reporting that Israeli helicopter gunships were firing on the West Bank and that Palestinian President Yasir Arafat's headquarters in Gaza had been attacked. Arafat was reportedly unhurt.
As the world's safest and most liquid asset,
Treasury securities typically rally in response to reports of international strife. Short-maturity Treasuries, which are the most liquid, have benefited the most in today's action.
The bond rally is occurring in spite of the fact that oil prices spiked in response to the news. Because they are potentially inflationary, rising oil prices normally cause alarm in the bond market. Today, demand for safety and liquidity is trumping oil in the setting of bond prices.
The benchmark 10-year
Treasury note, down as much as 9/32 earlier, lately was up 2/32 at 100 7/32, dropping its yield to 5.719.
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