NEW YORK - U.S. stocks had their biggest decline in six months yesterday as rising tensions in the Middle East and Home Depot Inc.'s warning that profit will miss expectations spooked investors. The Nasdaq composite index dropped to its lowest close this year.
Citigroup Inc., J. P. Morgan & Co. and other financial shares fell on concern that rising oil prices will spur faster inflation. Oil stocks such as Texaco Inc. and Unocal Corp. rose with the price of crude.
"There's no compelling reason to buy stocks and a lot more reasons to sell - we have Home Depot blowing up" and higher oil prices, said Robert Leshman, who runs New York hedge fund Briar Partners LP. "The lower stocks go, the more fear sets in and people say, `Get me out at any price.'"
The Dow Jones industrial average declined 379.21, or 3.6 percent, to 10,034.58, its biggest loss since April 14 and fifth-largest point drop ever. Home Depot and J. P. Morgan led the sell-off. Only seven of the average's 30 stocks rose, including Exxon Mobil Corp.
The Standard & Poor's 500 index fell 34.81, or 2.6 percent, to 1,329.78, also the largest drop since April 14. Seventy-five of its 87 industry groups declined.
The Nasdaq fell for a sixth day, losing 93.81, or 3 percent, to 3,074.68, its lowest close this year. The index has fallen 24 percent this year and 39 percent from its March 10 record.
Other broad market indexes fell, generally by about 2.5 percent. The Russell 2000 index, a benchmark of small-cap stocks, slipped 11.77 to 462.97; the Wilshire 5000 index shed 344.84 to 12,354.82; the American Stock Exchange composite index declined 2.14 to 913.41; the New York Stock Exchange composite index lost 16.30 to 624.12; and the S&P MidCap 400 index dropped 11.36 to 484.97.
The Sun-Bloomberg Maryland index of the top 100 Maryland stocks declined 6.24 to 237.32.
The index is down 32.51 percent since reaching a 52-week high of 351.62 on March 7.
The biggest losers among Maryland stocks included Aether Systems Inc., which closed at $75.56, down $7.63 a share; MedImmune Inc., $56.13, down $5.86; and Human Genome Sciences Inc., $78.88, down $3.
About three stocks fell for every one that rose on the NYSE. Almost 1.4 billion shares traded on the Big Board, according to preliminary figures, 38 percent more than the three-month daily average.
The market's decline sent 953 U.S. stocks to 52-week lows, including Motorola Inc. and Lycos Inc., while only 67, among them Unocal Corp. and Anadarko Petroleum Corp., touched new highs.
Oil and oil-service stocks were among the best performers in the S&P 500 as crude oil jumped 8.5 percent. Concern about escalating violence in the Middle East pushed oil prices near the high reached three weeks ago. At least six U.S. sailors died yesterday in a suspected bomb attack in Yemen and two Israeli soldiers were killed by Palestinians yesterday.
Texaco gained $1.81 to $57; Unocal rose $1.38 to $38.13; Conoco Inc. advanced 81 cents to $27.06; Exxon Mobil climbed 38 cents to $94.13; and Anadarko gained 54 cents to $72.79.
Every stock in the Philadelphia Oil Service Index rose, as the index advanced 3.4 percent, led by Smith International Inc., which added $2.75 to $81.88, and Nabors Industries Inc., which climbed $1.91 to $55.41.
The prospect of rising oil prices sparking a pickup in inflation cut into financial stocks. Citigroup, the biggest financial services company, fell $2.75 to $46.75; J. P. Morgan sank $10.38 to $136.44; and Wells Fargo & Co. dropped $1.13 to $42.75.
General Electric Co., whose GE Capital unit is the largest nonbank finance company, declined $1.69 to $54.94.
Brokerages fell on concern that fees for underwriting new stocks and bonds will dry up as the market declines.
Lehman Brothers Holdings Inc. sank $11.94 to $112.06, and Goldman Sachs Group Inc. dropped $9.69 to $94.31. Every stock in the American Stock Exchange Broker/Dealer Index declined.
Home Depot, the biggest seller of home-improvement products, sank $13.94, or 28 percent, to $35. The company said second-half profit will miss forecasts because lower prices for lumber hurt revenue and costs rose.
Other retail chains dropped with Home Depot, including Wal-Mart Stores Inc., which slid $1.19 to $44.13, and Lowe's Cos., which fell $3.25 to $37.81. Lowe's said last week that it would miss same-store sales forecasts. Best Buy Co. slipped $6.19 to $42.31.
"Now Home Depot won't meet earnings estimates on the heels of the Lowe's announcement," said Michael Manns, who manages $4.5 billion for American Express Asset Management Group Inc. "People are wondering where they can hide now. They can't hide in Wal-Mart or Home Depot anymore, so they're deciding to punt the whole space."
Airline stocks fell for a fifth day on concern about fuel costs. Delta Air Lines lost $12.13 to $41.63 after saying it would record a $141 million fiscal first-quarter charge related to fuel hedging contracts. Continental Airlines fell $2.81 to $41.06, and Southwest Airlines Co. fell $1.25 to $24.06.
Hasbro Inc. lost $1.56 to $10.06 after saying third-quarter profit was less than expected because of slow sales of its Pokemon toys, among other factors.
Overseas, Japan's Nikkei stock average rose 0.24 percent; Germany's DAX index was down 1.47 percent; Britain's FTSE 100 rose 0.23 percent; and France's CAC-40 was up 0.58 percent.