NEW YORK (CNN/Money) -
Stocks sank for the sixth time in seven sessions Wednesday as worries about a war with Iraq, a possible terrorist attack in the United States, and a brewing battle over the federal budget ambushed already anxious investors.
As if that weren't enough, the director of the CIA told the Senate that North Korea probably has missiles that could reach the United States.
With so much bad news, investors are afraid to plow funds into stocks, and the next batch of economic news and earnings reports are unlikely to change many minds, market analysts said. The No. 2 personal computer maker, Dell, is due to report results Thursday.
"There is an absolute certainty among investors that whatever news that happens is going to be bad," Phil Dow, director of equity research for RBC Dain Rauscher, told CNN/Money. "[The October lows] aren't sacrosanct and could be broken. We have a nation that's pre-occupied with what can go wrong. We'd need a booster shot of good news to move anywhere."
“ There is an absolute certainty among investors that whatever news that happens is going to be bad. ”
RBC Dain Rauscher
The Dow Jones industrial average (down 84.94 to 7758.17, Charts), the Nasdaq composite (down 16.49 to 1278.97, Charts) and the S&P 500 index (down 10.52 to 818.68, Charts) all fell more than 1 percent -- and all crept nearer to the five-years lows they hit in early October.
In the last seven sessions, the Dow has lost 4.3 percent of its value, leaving it down 7 percent so far this year. The tech-laden Nasdaq, off 3.4 percent since Feb. 3, is down 4.2 percent for the year, while the S&P has tumbled 4.8 percent in the latest swoon and is down 7.5 percent since the end of last year.
"With the overhanging cloud of the Iraqi situation, renewed fears of terrorism and tensions with North Korea, this market breeds fear, and fear drives stock prices lower,'' John Person, head financial analyst, Infinity Brokerage Services, told Reuters.
After a brief rally Monday, Wall Street's war worries returned Tuesday after the Qatar-based Al-Jazeera TV network broadcast an audio-taped message purportedly from Osama bin Laden, the leader of the al Qaeda terrorist network.
The message, which U.S. government officials said offered proof of bin Laden's ties to Iraqi president Saddam Hussein, escalated Wall Street's concerns that a war in the Middle East is all but inevitable and is to start very soon.
Intelligence sources told CNN that Saddam Hussein's military has moved Scud missile launchers next to mosques and historic sites to make them less vulnerable to attack. Meanwhile, dissent among U.N. Security Council members continues, with the United States urging a hard line and France adamant that weapons inspectors be given more time.
On Capitol Hill, Central Intelligence Agency Director George Tenet testified to the Senate Armed Services Committee that North Korea has an untested ballistic missile capable of hitting the United States.
Moments earlier Tenet had said North Korea probably had been able to produce as many as two plutonium-based nuclear weapons -- an estimate originally laid out in an unclassified CIA document in December 2001. (Click here for full coverage from CNN.com).
But the disclosures deepened a state of fear gnawing at Wall Street for nearly a month. The Dow had started the week on a positive note, after four straight losing weeks, but erased all its gains Tuesday and sank further Wednesday.
Stocks moved little on the latest testimony of Federal Reserve Chairman Alan Greenspan about the nation's economy. Greenspan provided his views to the House Financial Services Committee from the same prepared remarks presented to the Senate Banking Committee Tuesday.
Greenspan, in his semi-annual report to Congress served a blow to President Bush's tax-cut plan. Greenspan said he thought it was premature to enact tax and spending measures in an effort to boost the economy, and went even further, warning of the serious economic damage that could result from swelling federal budget deficits.
But economic and corporate news could affect how the markets move Thursday.
Before the opening bell, the Commerce Department plans to report its retail sales data for January. A consensus of economists surveyed by Briefing.com expects retail sales to have fallen 0.6 percent in January from a gain of 1.2 percent in December.
Separately, the Labor Department was set to report on new jobless claims for the week. Economists, on average, forecast that 390,000 new claims were filed, down slightly from 391,000 in the prior week.
In addition, investors were likely to consider some corporate fiscal results Thursday. Among those quarterly numbers likely to garner the most attention is Dell Computer (DELL: down $0.27 to $22.97, Research, Estimates). Economists expect the computer maker to report a profit of 23 cents a share, up from 17 cents for the same period in the prior year, according to Briefing.com.
Corporate news helps little
The latest earnings reports did nothing to alleviate Wall Street's concerns Wednesday because they showed small growth in corporate sales and bottom lines. Among the companies to disappoint, No. 1 chip equipment maker Applied Materials (AMAT: down $0.11 to $11.83, Research, Estimates) missed analysts' lowered fiscal first-quarter estimates by 2 cents a share and warned on its second quarter. The stock, battered in off-market hours, continued to lose ground Wednesday.
Also in the earnings news, Dow stock Coca-Cola (KO: up $0.74 to $39.74, Research, Estimates) bounced nearly 2 percent after the company reported fourth-quarter results that showed small improvement from a year earlier and met analysts' expectations. The beverage maker posted earnings of 40 cents a share, compared with 37 cents in the year-ago period. Merrill Lynch added the stock to its "Focus One" list on the report.
Shares of Dow component General Motors (GM: down $2.03 to $34.02, Research, Estimates) lost almost 6 percent after Banc of America downgraded the automaker to "sell" from "neutral" and slashed its price target on the stock, while also cutting its free cash flow growth estimate for the"Big 3" automakers to 0 percent from 2 percent.
The bank also cut its price target on Ford (F: down $0.10 to $8.75, Research, Estimates), which fell more than 1 percent. Competitor DaimlerChrysler (DCX: down $0.88 to $28.82, Research, Estimates) saw its shares dip almost 3 percent.
The stock market's struggles left bonds higher, with the price of the benchmark 10-year note up 12/32 of a point for a yield of 3.90 percent. The dollar trended higher against both the yen and the euro.
Oil prices rose near $36 a barrel in U.S. trading but ended up 7 cents at $34.54 a barrel. Gold plunged $10 to $353 an ounce in New York.
European markets suffered the effects of war talk, closing lower. Asian-Pacific stocks rallied and Tokyo's Nikkei 225 index climbed more than 2 percent.