NEW YORK (CNN/Money) - A late selloff Thursday brought the Nasdaq composite to its lowest level in nearly nine months and the Dow and S&P 500 to their lowest closes of the year, as investors again worried about security at home and abroad.

"Clearly world events are dictating the pace and the activity here," Marty Cunningham, head of Nasdaq trading at Schwab Capital Markets, told CNNfn's Street Sweep. "As we've seen in many of the afternoons over the past couple of weeks, individuals and traders just don't seem to be willing to hold positions overnight based on what's going on around the world."

The Nasdaq composite index tumbled 32.08, or 2.1 percent, to 1,464.75, its lowest since Sept. 27. The Dow Jones industrial average lost 129.80, about 1.4 percent, to close at 9,431.77, its lowest finish so far this year. And the Standard & Poor's 500 slid 13.70, a 1.3 percent drop to 1,006.29 that was also a low for the year.

The Nasdaq composite is now down nearly 25 percent for the year. The Dow is down nearly 6 percent and the S&P 500 down more than 12 percent.

A Palestinian gunman killed at least four Israelis at a Jewish settlement near Nablus late Thursday, Israeli military sources told CNN.

Selling on Wall Street accelerated late in the session, as it had the day before on news of another apparent suicide bombing in Jerusalem and the Israeli response. Later on Wednesday, the White House and Federal Reserve were evacuated on security concerns.

"I think there's a kind of 'buyers' strike,' for lack of a better term," Frank Gannon, portfolio manager at SunAmerica Asset Management, said during Thursday's session. "Until we start seeing some better earnings news, I think the market's going to be in this bottoming phase."

Trading could be volatile on Friday with "triple witching," when the contracts for stock index futures, stock index options and stock options all expire.

David Briggs, head of equity trading at Federated Investors, said "triple witching" normally generates some buying interest, but the markets have gotten so much better at dealing with expirations early that stocks may have seen that effect on Monday or Tuesday.

Walt Disney (DIS: down $1.30 to $19.56, Research, Estimates) was the weakest Dow component after Merrill Lynch cut its 2002 and 2003 earnings estimates for the company, citing disappointment in its film unit. MGM (MGM: down $0.57 to $13.18, Research, Estimates) warned its second-quarter loss would be wider than expected after consecutive box office disappointments such as the recent war film "Windtalkers," further pressuring media stocks.

Dow component General Motors (GM: down $2.59 to $53.75, Research, Estimates) shifted into reverse after it was downgraded by Morgan Stanley to "equal-weight" from "overweight" as part of an overall reduction of the auto industry.

Biotech issues pressured the Nasdaq after Genzyme (GENZ: down $6.17 to $19.70, Research, Estimates) said late Wednesday that second-quarter earnings will fall about 30 percent short of estimates due to weaker-than-expected sales of its kidney drug. Industry leader Amgen (AMGN: down $1.71 to $41.32, Research, Estimates) also was lower. The Amex biotech index fell more than 4 percent.

WR Hambrecht issued a bearish note on the software sector, including business program writers Oracle (ORCL: down $0.34 to $8.46, Research, Estimates), Siebel Systems (SEBL: down $0.83 to $14.30, Research, Estimates) and PeopleSoft (PSFT: down $0.86 to $18.00, Research, Estimates), all of which fell. The firm said that with the software sector having fallen through its post-Sept. 11 lows, it sees enterprise software stocks priced in anticipation of another round of weak second-quarter pre-announcements.

There was little reaction to several economic reports.

The index of leading economic indicators issued by the Conference Board showed a 0.4 percent rise in May, more of an improvement from the 0.3 percent decline in April than economists expected.

The Labor Department said the number of initial unemployment claims declined to 393,000 last week from a revised 395,000 in the preceding week. While the number was higher than the 385,000 consensus of economists surveyed by Briefing.com, it did remain below the 400,000 benchmark that signals economic weakness.

And, in a Commerce Department report, the April trade deficit widened to a record $35.9 billion from a revised $32.5 billion in March.

European markets ended near nine-month lows. Asian-Pacific stocks finished higher, with Tokyo's Nikkei index up 1.3 percent.

Treasury prices were lower, boosting the 10-year note yield to 4.78 percent. The dollar lost ground against the yen and fell close to a two-year low against the euro. Light crude oil futures rose 37 cents to $25.95 a barrel in New York, and gold rose $3.40 to $323.70 an ounce.

Market breadth turned negative late in the day. On the New York Stock Exchange, losers beat winners nearly 9-to-7 as 1.36 billion shares changed hands. On the Nasdaq, decliners beat gainers nearly 10-to-7 on volume of 1.69 billion shares.