Stocks finished sharply lower Thursday on a wave of late-session selling after a London newspaper reported having a letter from Al Qaeda claiming responsibility for terrorist bombings in Madrid. The attack sent many equity markets around the globe lower.
The major indexes hit fresh lows for the year. The Dow Jones industrial average fell 168.6 points, or 1.64%, to 10,128.38. The broader Standard & Poor's 500-stock index shed 17.1 points, or 1.52%, to 1,106.79. The Nasdaq composite index dropped 20.26 points, or 1.03%, to 1,943.89.
On Thursday, simultaneous explosions killed at least 190 people and wounded more than 1,200 on packed rush-hour trains in the Spanish capital in pre-election attacks. The Basque separatist group ETA denied it is responsible for the bombings, according to wire reports. Late in the afternoon, selling in the U.S. equity market picked up, when a London newspaper reported having a letter from Al Qaeda claiming responsibility for the Madrid bombings.
On Friday, the key economic report is the University of Michigan consumer sentiment index. Business inventories for January and the current account deficit for the fourth quarter will also be released.
Among the earnings reports coming Friday are from Apollo Group (APOL), Allegheny Energy (AYE), Borders Group (BGP), and McDermott International (MDR).
In economic news Thursday, retail sales were softer than expected in February, with headline sales up 0.6%, and sales excluding autos flat. Gains of 0.7% were expected in both categories. February's disappointment is mitigated somewhat by an upward revision to January data, says economic research outfit Informa Global Markets. January retail sales were revised to a gain of 0.2% from a prior decline of 0.3%, with sales ex-autos revised to a gain of 1.2% from 0.9%.
Weekly jobless claims fell 6,000 to 341,000 in the week ended Mar. 6, more than expected following an upward revised 347,000 reading before. The latest reading pushed the key 4-week moving average down to 345,800 - a level consistent with job improvement and well below the so-called boom/bust 400,000 level, says Informa Global Markets.
Also for February, import prices were up 0.4% (0.5% expected), with prices ex-petroleum up also 0.4%.
There are also some earnings reports to watch Thursday, namely from Oracle (ORCL) after the market close, as well as National Semiconductor (NSM).
In corporate news, Target (TGT) says it has retained Goldman Sachs to review strategic alternatives for its Mervyn's and Marshall Field's divisions. Alternatives include, but are not limited to, a possible sale of one or both of these divisions. The shares jumped on the news.
Nortel Networks (NT) says it has delayed the filing of 2003 annual reports as it re-examines certain accruals and provisions recorded in prior periods. It believes it will need to revise results for 2003 and restate previous financials for one or more earlier periods.
Shares of Leapfrog Enterprises (LF) plunged after the company cut its forecast to a first-quarter loss of 18 cents to 22 cents per share on $66 million to $72 million in sales, and reduced gross margin. Bear Stearns and Deutsche Bank downgraded the stock.
General Dynamics (GD) made a $557.7 million takeover offer for Alvis, Britain's leading armored-vehicle maker. BAE Systems holds a 29% Alvis stake.
Halliburton (HAL) shares fell. In response to information presented to Congress about company's work on government contracts in the Middle East, the company says it thinks every point has a reasonable explanation or could be refuted outright. S&P kept an accumulate ranking on the stock.
Among the sectors, aluminum stocks rose after Merrill Lynch upgraded Alcan (AL) and Century Aluminum (CENX) as a result of a stronger EPS outlook due to an upward revision in the Merrill Lynch aluminum price forecast for 2004 and 2005.
Trucking stocks also got a boost after Yellow (YELL) revised its guidance. The company narrowed its first-quarter EPS forecast to 30 cents to 35 cents, from its previous 25-35 cents range.
It was a volatile session for Treasuries, which opened higher following the Madrid bombings, with rumors of a link to Al Qaeda. Then prices tanked after the poor 10-year auction results, and Greenspan's optimistic labor market comments.
But prices popped by the close on news of an Arabic tape found in a van in Spain, which also contained detonators, in addition to news that France plans to raise its terror alert. The economic data were mixed and largely ignored, says Informa Global Markets. The yield on the 10-year note settled at 3.72%.
European stock markets skidded Thursday in reaction to Wall Street's plunge Wednesday and the deadly terrorist bombings in Madrid.
London's Financial Times-Stock Exchange 100 index was down 100.1 points, or 2.2%, to 4,445.2. Flomerics Group was lower, after the company said 2003 net income fell 15% from year ago levels because of the U.S. dollar's slump. Argonaut Games fell, after the company said its first-half loss widened from a year ago due to the weak dollar.
Germany's DAX index lost 139.75 points, or 3.46%, to 3,904.95. The German IFW economic institute lowered its EuroZone economic growth forecast. There was little reaction to a report showing February inflation fell to the lowest level since last July.
In Paris, the CAC 40 fell 111.66 points, or 2.97%, to 3,646.43. The Bank of France sees economy growing only 0.5% in first the two quarters.
Asian markets finished lower on Thursday. In Japan, the Nikkei 225 index lost 136.2 points, or 1.19%, to 11,297.04, with computer-related companies and automakers accounting for more than a quarter of its drop. Banks continued to remain positive, but exporters were hurt again as the Japanese yen resumed its strength vs. the U.S. dollar in Asian trade.
In Hong Kong, the Hang Seng index fell 190.14 points, or 1.44%, to 13,024.06. The conservative budget speech delivered by the Financial Secretary Henry Tang on Wednesday offered no stimulus to the stock market.