On Monday, it got personal.
Stocks closed broadly lower in moderate trading, as investors recoiled from the surprise resignation of a high-profile chief executive officer and the suicide of an embattled energy company official.
Dennis Kozlowski, CEO of one-time high flying conglomerate Tyco International, quit or was fired after he disclosed to his board that he was under investigation for evading New York state taxes.
Tyco has been a target of criticism concerning its aggressive acquisition and accounting strategies.
The body of Charles Dana Rice, treasurer of El Paso, was found in his home Sunday, dead of an apparently self-inflicted gunshot wound.
El Paso has been accused of manipulating energy prices and engaging in practices associated with Enron. El Paso said Rice was in ill health.
The stories added an element of human drama to the general market malaise, which has kept major stock indexes depressed for most of this year despite increasing evidence of a strong economic recovery.
The list of downbeat factors seems to grow by the week. Last week, tensions between nuclear powers India and Pakistan and the slide in the dollar against major currencies contributed to broad losses.
In Monday’s session, the Dow Jones industrial average fell 215.46, or 2.2 percent, to 9709.79, the lowest close since Feb. 7. All but two of the 30 Dow industrials–Procter & Gamble and AT&T–fell.
The broader Standard & Poor’s 500 index dropped 26.46, or 2.5 percent, to 1040.68. The Nasdaq composite index sank 53.17, or 3.3 percent, to 1562.56, the lowest level since Oct. 2, when Wall Street was recovering from Sept. 11.
Technology stocks were especially hard hit in Monday’s trading. Fears of profit warnings in the sector centered on business software developer Oracle, which lost 60 cents, to $7.32, a nearly three-year low.
The Russell 2000 index of small-company stocks fell 13.08, or 2.7 percent, to 474.39.
New York Stock Exchange trading volume reached 1.31 billion shares. Losing stocks outnumbered winners by a 5-2 margin. Nasdaq trading volume totaled 1.62 billion shares, as losers topped winners by a nearly 3-1 margin.
Treasury securities rallied, despite reports showing stronger-than-expected improvement in business conditions and a surprising gain in residential construction.
Having witnessed two successive years of negative returns in stocks, investors are bracing for what could be a long bear market.
William Lowery, executive vice president of Chicago-based investment consulting firm Performance Analytics, notes that the 17-year bull market from 1949 to 1966 was followed by 15 years of flat markets until 1982.
Whether the 17-year rally from 1982 to 1999 will give way to 16 barren years remains to be seen, but many investors are hedging their bets.
Real estate, commodities and bonds have attracted attention, as major stock indexes swooned. Equity investors are shopping overseas.
Jack Ablin, chief investment officer of the personal investment management group of Harris Bank, says he’s shifting money in his model portfolio to developed countries, especially in Europe. Last December, he began to shift into emerging markets.
The declining dollar in foreign exchange markets is validating his decision, Ablin said.
The consumer-led recovery in the United States, which helped the stock market pull out of the Sept. 11 disaster, benefited from the strong dollar, he said.
“Consumers had a strong dollar to use to buy imported goods,” he said.
The tail wind of a strong dollar is fading behind consumer-related stocks. Possible benefits to U.S. exporters from a cheaper dollar have yet to materialize.
The dollar’s decline is having a similar effect on international investors, who are withdrawing from the U.S. stock market.
Treasury auction: Short-term interest rates decline at the weekly auction of 3- and 6-month Treasury bills.
The discount rate on 3-month bills was 1.72 percent, down from 1.73 percent last week.
The rate for 6-month bills was 1.87 percent, down from 1.89 percent last week.
