Blue Chips at Two-Month Low on International Concerns
December 28, 2002
By REUTERS
Stocks fell yesterday, sending the blue-chip Dow Jones industrial average to a two-month low, as North Korea's decision to expel United Nations nuclear inspectors spurred concerns about a possible United States conflict on two fronts.
North Korea said it was expelling the inspectors monitoring a reactor that could turn out plutonium for atomic bombs, prompting new United States demands for the communist state to scrap its renewed pursuit of a nuclear arsenal.
"We have enough to deal with, with terrorism and Iraq; North Korea brings us one step further from global stability," said Peter Boockvar, equity strategist at Miller Tabak & Company. "It's one reason why people don't want to venture into stocks."
The Dow Jones industrial average declined 128.83 points, or 1.5 percent, to 8,303.78, while the broader Standard & Poor's 500-stock index sagged 14.26 points, or 1.6 percent, to 875.40. The Nasdaq composite index closed down 19.58 points, or 1.4 percent, at 1,348.31.
Stocks fell across the board, with only one — AT&T — rising among the 30 shares in the Dow Jones industrial average. The market gauge closed lower for the fourth consecutive session. Yesterday marked the third losing session in a row for the Nasdaq and S.& P. 500 index.
For the week, the Dow fell 2.4 percent and the S.& P. dropped 1.35 percent. The Nasdaq ended the week off 0.34 percent.
So far this month, the Dow is down 6 percent, its worst performance in December since 1931, according to MarketHistory.com.
The news from North Korea, which spurred fears of arms proliferation and the possibility of a showdown with the United States, came on top of nagging worries about a potential United States military action against Iraq.
"The macro situation with Iraq and North Korea is just overwhelming any rational thought. It's hard to make predictions when you have these gigantic fears out there," Mr. Boockvar said.
Short-dated Treasury yields touched record lows as rising global tensions drove investors to the safety of government debt. The yield on the two-year note fell to 1.6 percent. Its price, which moves in the opposite direction from the yield, rose 532, to 100932.
The 10-year Treasury note climbed 2432, to a price of 1011832. The note's yield declined to 3.81 percent from 3.90 percent on Thursday.
The price of the 30-year Treasury bond soared 1932, to 109632. The bond's yield fell to 4.78 percent from 4.86 percent on Thursday.
Another issue weighing on markets was the rising cost of oil, raising fears that high fuel costs could crimp the nation's economic recovery.
Crude oil futures on the New York Mercantile Exchange rose yesterday, with a late surge pushing prices to new two-year highs. February crude settled 23 cents higher at $32.72 a barrel, trading in a range from $32.05 to $32.76.
Lingering worries about the retailing sector hurt Amazon.com for a second consecutive day. Investors were worried that the holiday shopping season could rank as the weakest in 30 years for major retailers. Amazon's shares sank $1.44, or 7.1 percent, to $18.86.
AT&T shares rose 13 cents, to $27.75. The company plans to raise some long-distance rates next year and to increase monthly fees.
One bright spot was Lockheed Martin, which won a $3.5 billion deal to sell jets to Poland. Shares of Lockheed rose 80 cents, to $57.70.
Copyright 2002 The New York Times Company
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