US stocks tumble after Spanish terror attack

Nervous US investors sent stocks skidding today as a terrorist attack in Madrid overshadowed mostly good economic news and bullish forecasts from several companies.

Nervous US investors sent stocks skidding today as a terrorist attack in Madrid overshadowed mostly good economic news and bullish forecasts from several companies.

The Dow Jones industrial average nosedived nearly 170 points, giving it a two-day drop of 328.

The Spanish government initially blamed Basque separatists for the worst terrorist strike in the nation’s history.

But police later found a van with detonators and an audiotape of Koranic verses near the site, and a London-based Arabic newspaper said it had received a claim of responsibility in the name of al Qaida.

The development caused US markets to shudder.

The Dow Jones industrial average sank 168.51, or 1.6%, to 10,128.38, leaving it down more than 3% for the year.

The swings in the index of 30 actively traded industrial stocks came a day after it plunged 160.07 as investors became increasingly fearful that a long-forecast correction was under way.

Since Monday, the Dow has lost 467.17 points.

The broader market also dropped sharply. The Nasdaq composite index lost 20.26, or 1%, to 1,943.89, down almost 3% for the year.

The Standard & Poor’s 500 index was down 17.13, or 1.5%, at 1,106.76, a 0.5% loss since the start of 2004.

“This has been quite a day,” said Michael Cuggino, president and manager of the Permanent Portfolio Fund.

”This is why you need to be exposed to a lot of different asset classes that can protect you from the different scenarios that come up in a volatile global political climate.”

The possible link between al-Qaida and the bombings in Spain shook Wall Street, which was already uncertain about the job market and the strength of the US economic recovery.

It was still unclear who was responsible for the massive attack in Spain, in which 10 bombs along a rail line killed 190 people and injured 1,200 others at the height of rush hours.

Beyond the terrorism concerns, the market’s own dynamics were causing concern among analysts.

Usually solid performers were lagging the tech-heavy Nasdaq, the most volatile gauge in recent months.

National Semiconductor was up 1.36 at 39.56 after posting quarterly profits that beat expectations on strong sales in the personal computing and wireless markets.

The news offered some short-term support for tech shares – computer maker Dell was up 68 cents at 32.22, but chip-maker Texas Instruments was down 26 cents at 29.42 after an earlier rise.

The market gyrations prompted investors to seek safer positions, and some of the more economically sensitive basic materials stocks that saw the steepest losses in the previous session rebounded.

On the Dow, Alcoa was up 47 cents at 34.67.

Target Corp emerged as one of the day’s biggest winners, advancing 3.15, or 7.6%, to 44.88, after saying it was considering selling its Mervyn’s and Marshall Field’s divisions.

Several brokerage analysts issued upgrades on the news.

In a hopeful sign for growth in the current quarter, the Commerce Department reported a 0.6% rise in US retail sales in February, matching economists’ expectations.

Separately, the Labour Department reported new claims for unemployment benefits dropped last week by a seasonally adjusted 6,000 to 341,000, beating forecasts.

Although the pace of redundancies is slowing, companies do not seem to be in a hurry to hire new staff, which has concerned economists.

Perhaps reassuring some investors, Federal Reserve Chairman Alan Greenspan told a congressional committee he remained confident employment would increase as the economic recovery continued.

The answer to the US job worries lies in expanded educational opportunities for Americans, he said, not protectionist trade barriers.

The loss of jobs to foreign competition has become an election-year issue.

Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange.

Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, was down 6.28, or 1.1%, at 568.73.

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