Stocks Pummeled amid War Fears
In a rollercoaster session, stocks finished with steep losses Monday afternoon as a work stoppage of West Coast port workers, increasing concern about a weak economic recovery, and an upcoming speech by President Bush weighed on investors.
The Dow Jones industrial average marched lower, ending down 105.42 points, or 1.40%, to 7,422.98. The tech-heavy Nasdaq composite index slipped 20.07 points, or 1.76%, to 1,119.83. And the broader Standard & Poor's 500-stock index lost 15.30 points, or 1.91%, to 785.28.
A contract dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union has resulted in a lockout of dock workers. Investors are concerned that retailers' crucial holiday shopping season will be in jeopardy. President Bush will convene a board of inquiry into the lockout, now on its eighth day, after talks broke down Sunday night. Bush may not wait much longer before invoking the cooling-off provision of the Taft-Hartley Act, according to economic research outfit MMS International.
Bush will speak Monday evening from Cincinnati at 8:01 p.m. EDT. During the televised speech, he is expected to outline his case against Iraqi President Saddam Hussein. The address is aimed at increasing support for war with Iraq, but Bush is not expected to reveal any new specifics of the administration's plans.
On Tuesday, investors will digest third-quarter earnings from soda and snacks maker PepsiCo (PEP ). Wall Street expects the company to post per share earnings of $0.55, compared with $0.49 a year ago. Restuarant chain Ruby Tuesday (RI ) is expected to report first quarter earnings per share of $0.31 compared with $0.26 in the same quarter last year.
No economic data are due until the end of the week. On Friday, investors will get a crucial read on the stamina of the American consumer -- September retail sales. Economists are forecasting a drop of 1%.
In corporate news Monday, Dow member and computer chip giant Intel Corp. (INTC ) gained ground after its CEO Craig Barrett said on Sunday he was more optimistic than ever about the tech sector and saw the current crisis ending by early 2003. Shares moved up about 1%.
Dow component and financial powerhouse J.P. Morgan Chase (JPM will fire about 20% of its 20,000 investment bankers this month amid declining falling trading revenue and rising losses from loans. Shares moved up by more than 1%. Shares of Sears (S closed down 13% after it warned that third-quarter profits would be below Wall Street expectations. The company said its lucrative credit card business lost ground amid a difficult economy.
AOL Time Warner (AOL is making headlines again over accounting questions. A deal with Oxygen Media is being probed by the Securities and Exchange Commission to see if revenues were booked at more than one of AOL's units, according to a report in Monday's Wall Street Journal. AOL Time Warner invested $30 million to $50 million in Oxygen Media, while Oxygen agreed to buy $100 million of advertising on America Online. Shares of AOL fell close to 6%.
U.S. Treasuries Monday finished with solid price gains amid continued weakness in stocks.
Up next for economic data: on Thursday, import prices and wholesale prices. Investors will digest September retail sales data and producer price index Friday.
European stocks slid amid ongoing geopolitical worries. London's Financial Times Stock exchange index finished down 32.90 points, or 0.86%, to 3,780.90. Germany's DAX index shed 47.23 points, or 1.74%, to 2,667.39. France's CAC index finished off 32.34 points, or 1.17%, to 2,733.56.
Asia's stocks nose-dived as investors feared more corporate failures in Japan. Tokyo stocks slid to a 19-year low. The benchmark Nikkei 225 index lost 339.55 points, or 3.76%, to 8,688.00. In Hong Kong, the Hang Seng Index tumbled 119.97 points, or 1.33%, to 8,931.40.