The Bush factor?
Apparently there is another explanation:
Interest Rate Fears Prompt Stock Selloff
Apr 13, 2:21 PM (ET)
By MICHAEL J. MARTINEZ
NEW YORK (AP) - Investors worried that booming retail sales might lead to a sooner-than-expected interest rate hike sold off stocks Tuesday, sending the Dow Jones industrial average down more than 100 points.
The Commerce Department reported a 1.8 percent increase in retail sales for March, the biggest jump in a year and far better than the 0.6 percent economists expected. Consumer spending increased across the board, fueled by tax returns, an improving employment picture and low interest rates.
But the sharp jump raised the specter of inflation, and concerns that the Federal Reserve would raise interest rates to keep the economy from growing too fast. And a hike before year's end could put President Bush's re-election into question, according to Hugh Johnson, chief investment officer at First Albany Corp.
"That worries investors that we're going to see a Democratic administration, which might roll back the 15 percent tax rate on capital gains and dividends," Johnson said. "It's a whole string of dominoes. If this weren't an election year, you'd see earnings and economics outweigh the interest rate concerns."
While the retail data helped the markets open higher, the major indexes quickly slipped into negative territory. In midafternoon trading, the Dow Jones industrial average was off 116.40, or 1.1 percent, at 10,399.16.
Broader stock indicators also dropped. The Standard & Poor's 500 index was down 13.74, or 1.2 percent, at 1,131.46, and the Nasdaq composite index fell 29.05, or 1.4 percent, to 2,036.43.
With earnings season under way, healthcare products maker Johnson & Johnson (JNJ) and investment firm Merrill Lynch & Co. (MTDB), two closely watched stocks, both surpassed Wall Street estimates in announcements before the start of trading. But these were overshadowed by the interest rate worries, and may not have been impressive enough to move the market anyway.
"Investors want to be awed. It's come to that, quite frankly," said John Lynch, chief market analyst at Evergreen Investments. "We have the market expecting 17 percent, so it better be 20 percent for the market to be really impressed."
Strong sales and favorable exchange rates spurred a 20 percent hike in profits at Johnson & Johnson, which beat estimates by 3 cents per share and gained 53 cents to $51.73. Merrill Lynch, meanwhile, slumped $1.36 to $58.37 after posting record first-quarter earnings of $1.22 per share, beating analysts expectations by 15 cents per share.
(AP) Traders work on the floor of the New York Stock Exchange, Friday morning April 2, 2004. With the...
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Falling mortgage bank income hurt BB&T Corp. (BBT)'s earnings, which missed estimates by 3 cents per share. BB&T lost 21 cents to $34.69.
Media company Dow Jones & Co. fell 86 cents to $48.09 after reporting a 73 percent drop in first-quarter earnings due to a one-time gain a year ago. The publisher of The Wall Street Journal beat analysts' expectations by 2 cents per share, however.
Intel Corp. (INTC) was up 20 cents at $27.80 in advance of its earnings report, due after the close of trading Tuesday.
Declining issues outnumbered advancers by more than 4 to 1 on the New York Stock Exchange, were volume came to 1.07 billion shares, compared with 727.96 million at the same point Monday.
The Russell 2000 index of smaller companies fell 11.82, or 2 percent, to 587.83.
Overseas, Japan's Nikkei stock average gained 0.4 percent. Britain's FTSE 100 was up 0.6 percent for the session, France's CAC-40 closed 0.9 percent higher, and Germany's DAX index surged 1.4 percent in late trading.
apnews.myway.com
Then again, if you want to scream your little conspiracy theories, be my guest.
Diz- |
