Dow closes below 10,000 as interest rate fears drive selling
By Michael J. Martinez AP Business Writer
NEW YORK (AP) – 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. 12 and sending all three major indexes to their lows for the year.
The dread that has sent stocks tumbling over the past four weeks intensified after Friday’s employment report from the Labor Department – 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, sending overseas markets tumbling 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.”
According to preliminary calculations, the Dow fell 127.32, or 1.3 percent, to 9,990.02 in heavy volume on the New York Stock Exchange. At one point, the Dow had been down 183.11. It was the lowest close for the Dow since Dec. 12, the last time the Dow closed 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.
AP-ES-05-10-04 1612EDT