Stocks fall after assassination of Bhutto
EmptyNEW YORK -- Stocks fell in Thursday after the assassination of Pakistani opposition leader Benazir Bhutto and after the Commerce Department reported a weak increase in durable goods orders. The Dow Jones industrial average fell more than 100 points.
Bhutto's assassination raised the possibility of increasing political unrest abroad, always an unsettling prospect for investors. Oil and gold prices rose following the news.
Meanwhile, the government said orders for durable goods -- big-ticket items from commercial jetliners to home appliances -- rose by just 0.1% last month. Economists had been looking for a rise of 2.2%. Still, November saw the first rise in durable goods orders in the last four months.
The notion that the economy is slowing was also unnerving for the market.
The Labor Department said the number of workers seeking unemployment benefits showed a surprise increase last week. Applications filed for unemployment insurance rose by a seasonally adjusted 1,000 to 349,000. Economists had expecting the figure would fall to around 340,000 for last week.
In a bright spot, the Conference Board said its Consumer Confidence Index advanced to 88.6 in December from a revised 87.8 in November. It was the first increase since July and Wall Street had expected a slight drop.
Wall Street follows the employment and consumer confidence figures because consumer spending represents about two-thirds of economic activity in the U.S.
"The data came in a bit softer than people were anticipating and then you throw in the situation in Pakistan and that's led people to rush back into Treasurys," said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles.
In late morning trading, the Dow fell 116.40, or 0.86%, to 13,435.29.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 10.42, or 0.70%, to 1,487.24, and Nasdaq composite index fell 19.95, or 0.73%, to 2,704.46.
Bond prices rose as investors worried about political instability sought the safety of U.S.-backed investments. The yield on the 10-year Treasury note, which moves opposite its price, fell to 4.22% from 4.29% late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $1.15 to $97.12 per barrel on the New York Mercantile Exchange and investors again eyed the $100 mark as they had in November. Oil saw its peak of $99.29 on Nov. 21.
Oil also pushed higher after the Energy Department said in a weekly report that oil inventories fell by 3.3 million barrels last week, more than double the 1.3 million barrel decline analysts surveyed by Dow Jones Newswires had expected.
Stocks have managed to advance for the past four trading days, posting a modest increase Wednesday as investors tried to reconcile their expectations with somewhat disappointing results from retailers.
The battered financial sector again commanded some of Wall Street's attention following predictions by Goldman Sachs that the flood of writedowns at banks will continue.
Goldman predicted Citigroup Inc. may be forced to write off 70% more than the $8 billion to $11 billion Citi forecast in early November. Citi could also cut its dividend by 40% and may need to raise $5 billion to $10 billion more cash, Goldman estimates.
Citi, one of the 30 stocks that makes up the Dow Jones industrials, fell 66 cents, or 2.2%, to $29.79.
Meanwhile, Goldman also raised concerns about Merrill Lynch & Co., which fell $1.29, or 2.4%, to $53.76 and JPMorgan Chase & Co. fell 42 cents to $44.52.
In other corporate news, Sallie Mae fell $1.35, or 6.1%, to $20.78 after saying it would sell $2.5 billion in stock and use a bulk of the proceeds to settle contracts requiring the company to buy back stock at prices above current levels. The student lender, officially known as SLM Corp., shares fell sharply last week amid concerns about the company's plans following a the collapse of a $25 billion buyout deal.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 253.6 million shares.
The Russell 2000 index of smaller companies fell 11.67, or 1.46%, to 785.36.
Overseas, Japan's Nikkei stock average fell 0.57%. In afternoon trading, Britain's FTSE 100 rose 0.10%, Germany's DAX index gained 0.39%, and France's CAC-40 added 0.14%.