US stocks sink on Malaysia Airlines crash

US stocks tumbled Thursday after a Malaysian airliner crashed in rebel-held eastern Ukraine, with Kiev saying it was shot down, heightening tensions in the months-old conflict and shaking markets. AP FILE PHOTO

NEW YORK–US stocks tumbled Thursday after a Malaysian airliner crashed in rebel-held eastern Ukraine, with Kiev saying it was shot down, heightening tensions in the months-old conflict and shaking markets.

The Dow Jones Industrial Average sank 161.39 points (0.94 percent) to 16,976.81, retreating from Wednesday’s record close.

The broad-based S&P 500 plummeted 23.45 (1.18 percent) to 1,958.12, while the tech-rich Nasdaq Composite Index lost 62.52 (1.41 percent) at 4,363.45.

“Obviously it’s all about the tragedy in Ukraine,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “This raises the level of the fear factor regarding geopolitical concerns.”

There were no signs of survivors from the crash of Malaysia Airlines Boeing 777, which was carrying 298 people from Amsterdam to Kuala Lumpur.

Ukraine President Petro Poroshenko said he could not rule out that the plane was shot down. Poroshenko’s official spokesman said he believed pro-Russia insurgents downed the jet.

“This incident is not a catastrophe. It is a terrorist act,” Poroshenko’s spokesman posted on Twitter.

The disaster sparked a stampede of money away from stocks and toward safer assets, such as gold (+1.4 percent) and US Treasuries, with bond prices rising.

The yield on the 10-year US Treasury fell to 2.47 percent from 2.54 percent Wednesday, while the 30-year dropped to 3.29 percent from 3.35 percent. Bond prices and yields move inversely.

European equity markets also retreated, with the British FTSE-100 losing 0.7 percent, the French CAC-40 dropping 1.2 percent, and the German DAX giving up 1.1 percent.

The plane crash in rebel-held eastern Ukraine comes at a sensitive moment in a regional crisis that has stoked tensions between Russia and the West.

On Wednesday, the US and the European Union strengthened sanctions on Moscow, with President Barack Obama criticizing Russia for its “continued provocations in Ukraine.”

Russia angrily denounced the sanctions.

The plane crash is “really bad news, much more serious than the sanctions announced yesterday by Washington,” said Gregori Volokhine, president of Meeschaert Capital Markets.

“Air travel is very important for the economy,” he added. “This is very destabilizing for travelers and investors.”

Delta Air Lines dropped 3.4 percent as it said it would no longer send flights through Ukrainian airspace.

American Airlines (-4.1 percent) and United Continental (-3.5 percent) also fell. Dow component Boeing dropped 1.2 percent.

The plane crash overshadowed a busy day of corporate earnings. Investment bank Morgan Stanley dipped 0.6 percent despite beating expectations by a wide margin, while toymaker Mattel slumped 6.6 percent as profits sank percent due in part to a big drop in sales of the iconic Barbie doll.