Dow closes below 10,000 mark
NEW YORK — Interest rate fears drove a major selloff on Wall Street Monday, with the Dow Jones industrial average closing below 10,000 for the first time since Dec. 10 and all three major indexes dropping to their lows for the year.
The dread that has sent stocks tumbling over the past four weeks intensified in response to Friday’s employment report from the Labor Department that the U.S. gained 288,000 new jobs in April. Investors feared the news would prompt the Federal Reserve to raise rates as early as next month, and selling spread around the globe Monday before sending Wall Street skidding as well.
“Of course, psychologically, Dow 10,000 has some short-term effects on the market,” said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. “Long-term, the markets still look at corporate fundamentals, earnings, that sort of thing. But we do have some inflation and interest rate fears in play which could keep things lower, at least for now.”
The Dow fell 127.32, or 1.3 percent, to 9,990.02 in heavy volume on the New York Stock Exchange and Nasdaq Stock Market. At one point, the Dow was down 183.11. Its close was the lowest for the blue chips since Dec. 10, the last time the Dow ended below 10,000.
Broader stock indicators were also sharply lower. The Standard & Poor’s 500 index was down 11.58, or 1 percent, at 1,087.12, its lowest point since Dec. 17. The Nasdaq composite index dropped 21.89, or 1.1 percent, to 1,896.07. The Nasdaq last closed below 1,900 on Nov. 21.
Since Wednesday’s close, when the market last closed with an advance, the three major indexes have fallen sharply. The Dow is down 320.93, or 3.1 percent, the S&P 500 has tumbled 34.42, or 3.1 percent, and the Nasdaq has fallen 61.19, or 3.1 percent. All three indexes hit new lows for 2004.
Wall Street has been gripped by a spasm of selling for four weeks as economic indicators grew more positive and investors worried that corporate profits would be eroded by an ensuing series of interest rate hikes. Along the way, the market completely ignored a stellar batch of first-quarter earnings reports.