Stocks Drop as Rate Fears Rule
By Nat Worden
TheStreet.com Staff Reporter
5/6/2004 11:37 AM EDT
Stocks plummeted Thursday as investors continued to focus on future interest rate hikes as well as a comment by Fed Chairman Alan Greenspan that the U.S. government's budget deficit threatens long-term stability.
The Dow Jones Industrial Average lost 88 points, or 0.8%, to 10,223; the S&P 500 was down 10 points, or 0.9%, to 1111; while the Nasdaq shed 29 points, or 1.5%, to 1929. The 10-year Treasury note was trading down 2/32 to yield 4.59%, while the dollar was lower against the euro and higher against the yen.
Although overall volume was low, the Nasdaq recently dropped below its 200-day moving average of 1938.52.
Overseas markets were lower, with London's FTSE 100 down 0.8% to 4531 and Germany's Xetra DAX losing 2.1% to 3936. In Asia, Japan's Nikkei lost 1.6% to 11,571, while Hong Kong's Hang Seng rose 0.5% to 12,010.
Greenspan told a banking conference in Chicago that the federal deficit, estimated to climb above $500 billion this year, will amount to 4.25% of the total economy after being in surplus just a few years ago.
"Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances," he said.
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