Monday's unofficial close: US stocks fall sharply weighed by oil, Iraq attack
Stocks fell sharply Monday, after the killing of a key figure in Iraq's new government heightened investors' concerns about geopolitical stability and helped send oil prices to fresh record highs.
American Insurance Group and Citigroup were the biggest drags on the Standard & Poor's 500 Index. Weakness in Qualcomm Inc and Cisco Systems Inc held back the technology-laden Nasdaq, which slumped to levels unseen since October 2003.
"The tone for today's market was set before the open, with the overnight bombing and murder in Iraq of one of the leading Council members, which triggered selling in almost every market overseas," said Brian Bush, research director at Stephens Inc in Little Rock, Arkansas.
"We have all-time highs in terms of oil prices, a ballooning likelihood the Federal Reserve will raise rates, and instability around the world especially in Iraq, which all makes for pretty negative sentiment," Bush said.
The Dow Jones industrial average fell 109.72 points, or 1.10 percent, to 9,909.37, while the S&P 500 Index lost 12.18 points, or 1.11 percent, to 1,083.58. The Nasdaq Composite Index sagged 28.08 points, or 1.47 percent, to 1,876.17.
The major market gauges rose from their session lows, after the US military reported an artillery shell exploded in Iraq, releasing a small amount of the nerve agent sarin. It was the first announcement of the discovery of any of the weapons on which the Bush administration made its case for war.
"It's probably a relief reaction, since it may give credence to the argument over weapons of mass destruction that the Bush administration made for going to Iraq," Bush added. "We're under such scrutiny world-wide, any news that would elevate the US standing is positive."
Lucent Technologies topped the New York Stock Exchange's most active list, giving up 19 cents, or 5.8 percent, to $3.09. On Monday, the US Securities and Exchange Commission said it charged 10 individuals with securities fraud for their roles in accounting problems at the telecoms equipment maker.
The SEC also said Lucent, as reported in March, would pay $25 million to settle the case in which it was accused of improperly recognising revenues. The SEC said it fined Lucent for failure to co-operate with government investigators.
Lowe's Cos. shares fell, even after it reported its quarterly profit rose, helped by sales of higher-priced items like kitchen cabinets, and an expansion into big US cities.
Shares of Lowe's, the world's No 2 home improvement retailer after Home Depot Inc, fell $1.03, or 2 percent, to $49.55 amid concerns that high energy prices and rising interest rates might hurt home improvement spending, analysts said.
Security concerns took centre stage after a suicide car bomb killed the president of Iraq's Governing Council on Monday, dealing a major blow to the US coalition battling a Shia insurgency and a growing prisoner abuse scandal.
In addition, four small bombs exploded outside British banks in Turkey hours before Prime Minister Tony Blair's visit.
Surging oil prices also rattled investors, as the spike in oil fed speculation that the Federal Reserve might soon hike short-term interest rates to keep a lid on inflation.
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