Posted at 12:15 p.m., Thursday, December 19, 2002
Dow hits lowest level in six weeks
Hawai'i Stocks
Updated Market Chart
By Hope Yen
Associated Press
The Dow Jones industrials fell to their lowest level in nearly six weeks.
Analysts said trading was choppy as investors struggled to decide whether to buy on bets of stronger prospects in 2003. But the escalating rhetoric on Iraq today ultimately gave them another reason to sell, they said.
"They're worried quite a bit about a war, and they're still worried about corporate profits and economic factors going forward," said Mark Donahoe, managing director at US Bancorp Piper Jaffray in Minneapolis.
The Dow Jones industrial average fell 82.55, or 1 percent, to close at 8,364.80, for a three-day loss of 262 points. It was the lowest finish since Nov. 11, when blue-chip stocks closed at 8,358.95.
The broader market also declined. The Nasdaq composite index lost 7.30, or 0.5 percent, to 1,354.21. The Standard & Poor's 500 index dropped 6.85, or 0.8 percent, to 884.27.
Chief U.N. weapons inspector Hans Blix told the Security Council that Iraq's 12,000-page weapons declaration contains gaps and inconsistencies. The United States called Iraq in "material breach" of U.N. resolutions, setting a course toward a possible war early next year.
Investors, meanwhile, largely shrugged off reports showing modest improvements in the economy.
The Labor Department reported today that new claims for unemployment benefits dropped last week by a seasonally adjusted 11,000 to 433,000. Yet, even with the drop, claims remained above the 400,000 mark, a level associated with a lackluster job market.
And the New York-based Conference Board said its Index of Leading Economic Indicators rose 0.7 percent in November, the largest monthly gain in a year, following a revised 0.1 percent increase the previous month. The November figure slightly beat analysts' estimates.
Analysts say investors in recent days have been uncertain whether to commit to stocks on hopes of a strengthening economy or cash in quick profits from an eight-week blue chip rally in the autumn.
Indeed, many analysts are questioning whether Wall Street will see its traditional holiday rally in the last two weeks of December.
"In the absence of really strong and compelling economic evidence, the markets are still subject to tax selling," said A.C. Moore, chief investment strategist for Dunvegan Associates, referring to the practice of dumping losing stocks at year's end to lower income tax payments.
"It's just a mechanical thing. Stocks usually go sideways in early December and then lift into the so-called Santa Claus rally," he said.
Donahoe wasn't so sure.
"You're not going to get anything in terms of a rally with the talk of Iraq going on. We had such a big move up, we're basically just pulling back," he said.
Decliners included AT&T, which fell $1.20 to $25.11, and Eastman Kodak, which dropped $1.22 to $35.95.
But Oracle rose 37 cents to $11 after the business software maker reported earnings that beat analysts' expectations.
Dole Foods jumped $4.13, or 14.5 percent, to $32.58, after its chairman, David Murdock, agreed to buy all of the giant food company's outstanding shares he doesn't own and take it private in a $2.5 billion deal.
Declining issues outnumbered advancers 17 to 11 on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, fell 0.52, or 0.1 percent, to 383.41.