Stocks sink as protests escalate in Egpyt
NEW YORK (AP) -- Stocks fell broadly today as the unrest in Egypt worsened. The dollar, Treasurys, gold and other assets seen as safe rose.
The Egyptian government's response to escalating street protests unnerved investors. Riot police fired tear gas, rubber bullets and used water cannons to disperse a crowd that had gathered in the largest challenge to Egyptian president Hosni Mubarak's thirty-year rule.
Thousands of people defied a curfew, and the government deployed the military in an effort to restore order. Internet and cell phone service has been cut off. The headquarters of the ruling party was on fire.
"Traders are watching this flare-up in the Middle East and using it as a reason to take profits," said Doug Godine, managing director at Signal Hill, an investment bank.
Prices of Treasury bonds, considered one of the safest assets, rose sharply. The yield on the benchmark 10-year Treasury note fell to 3.34 percent from 3.38 percent late Thursday. Bond yields move in the opposite direction of their prices.
The dollar rose 0.5 percent against an index of six other currencies as investors sought safety. Gold rose 1.6 percent to $1,339.50 and crude oil rose 4.4 percent to $89.42 a barrel.
Disappointing earnings reports also helped send stocks lower. Ford Motor Co sank 12 percent after its earnings fell short of Wall Street's projections. Amazon.com Inc. fell 8.5 percent after reporting that higher costs cut down its profit margins. Microsoft Corp. lost 4 percent after it said that the profitability of its Windows division was falling.
The Dow Jones industrial average fell 138 points, or 1.2 percent, to 11,852 in afternoon trading.
The Standard & Poor's 500 index fell 18, or 1.4 percent, to 1,281. All 10 company groups that make up the S&P index fell.
The Nasdaq composite index fell 61, or 2.2 percent, to 2,694. The index was not updated nearly an hour after the market opened due to technical problems.
Stock indexes also fell in Europe as the unrest in Egypt worsened. Britain's FT-SE and France's CAC-40 both fell 1.4 percent.
News on the U.S. economy was less encouraging than investors had hoped. The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 3.2 percent between October and December. That was below the 3.5 percent that analysts had forecast.
Sara Lee Corp. fell 2.2 percent after announcing a plan to split into two companies. One, a food and retail business, will keep the Sara Lee name and also operate the Jimmy Dean and Hillshire Farms businesses. The other, which has yet to be named, will hold the current company's beverages and baked goods lines. The company had considered selling the whole business but was unable to get a satisfactory price for it.