War fears take toll on market
Published: Tuesday, January 28, 2003 at 6:01 a.m.
Last Modified: Monday, January 27, 2003 at 11:37 p.m.
NEW YORK - War fears pummeled Wall Street on Monday, pushing the Dow Jones industrials below the 8,000 level for the first time in three months and sending the overall market lower for the seventh time in eight sessions.
Investors unloaded shares as U.N. weapons inspectors reported that Iraq failed to cooperate in helping their searches for arms and said inspections need more time. Investors also were cautious ahead of President Bush's State of the Union address todayTuesday.
The Dow closed down 141.45, or 1.7 percent, at 7,989.56. The blue chips last traded below 8,000 on Oct. 15 and last closed below that level Oct. 14, when they stood at 7,877.40.
The Dow suffered its fifth triple-digit decline in six sessions and its seventh loss in eight sessions. In eight sessions, the Dow dropped 853 points, more than wiping out all of its 2003 gains.
The broader market also pulled back sharply. The Nasdaq composite index fell 16.87, or 1.3 percent, to 1,325.27. The Standard & Poor's 500 index fell 13.92, or 1.6 percent, to 847.48, having fallen on Friday, as the Dow did, to levels last seen in October.
''The public at large is shunning equities. This is traditionally the time when money comes into equities, into retirement accounts. So, this is disturbing,'' said Stephen Massocca, president of Pacific Growth Equities. ''People are concerned about Iraq, but I think there is a deeper concern about the state of the economy, the state of the markets. There is a kind of bear market malaise.''
Investors are worried that war with Iraq would come as a particularly hard blow to an already feeble economy. One concern is that higher oil prices would result and would eat away at corporate profits. Another worry is that consumers would curtail their spending, which accounts for two-thirds of the economy.
Both consumer cyclical stocks, such as retailing and automobile issues, and oil stocks traded lower on investors' war fears. Retailer Kohl's fell $1.25 to $52.50, General Motors declined 56 cents to $36.99, while Exxon Mobil stumbled 87 cents to $31.82.
''The confrontation (with Iraq), even though anticipated, is still an expensive matter and one with an uncertain outcome. So, the markets are on edge,'' said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.
The market perhaps could have better tolerated its war jitters and fended off some losses if it weren't for a rather lackluster earnings season. Companies reporting their fourth-quarter profits during the past two weeks have either disappointed investors with past performance or with their dim outlooks for the future.
Indeed, on Monday, disappointing earnings results dragged some individual stocks lower. Mortgage banker Freddie Mac fell $2.51 to $56.60 on fourth-quarter earnings that missed analysts' expectations by 15 cents a share.
Tyson Foods dropped $1.25 to $10.24 after reporting fiscal first-quarter profits that were a penny shy of Wall Street's forecast.
Brokerage house downgrades hurt other issues. Scripps fell $1.91 to $78.92 after Credit Lyonnais Securities downgraded the media company to ''add'' from ''buy.''
But FedEx rose 85 cents to $51.65 after Morgan Stanley raised its recommendation on the stock to ''equal-weight'' from ''underweight.''
Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange. Consolidated volume was light at 1.79 billion shares, below Friday's 1.95 billion shares.
The Russell 2000 index, which tracks smaller company stocks, fell 6.48, or 1.7 percent, to 368.58.
Overseas, Japan's Nikkei stock average finished Monday down 1.4 percent. In Europe, France's CAC-40 slid 3.6 percent, Britain's FTSE 100 dropped 3.4 percent and Germany's DAX index lost 2.7 percent.
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