Stocks soar on war gains

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By Hope Yen
Associated Press

NEW YORK — Wall Street shot higher as U.S.-led forces closed in on Baghdad today, boosting investor optimism that the two-week-old war with Iraq might soon end. The Dow Jones industrials soared 215 points to their best performance in nearly two weeks.

Tech shares surged, led in part by a positive outlook from Biogen, while airline stocks gained on approval from House and Senate appropriations committees of about $3 billion in federal aid.

"The march to Baghdad is really driving the markets higher," said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank. "This (market) move emphasizes that we have a lot of cash on the sidelines ready to be put to work."

"As we hear more rumors of Saddam being dead, that will come to permeate into investors' thinking, bringing them closer to the thought that this is a war that is shorter in nature," Wolfe added.

The Dow closed up 215.20, or 2.7 percent, at 8,285.06, having gained 77 points yesterday to snap a four-day losing streak. It was the largest advance since March 21, when blue-chip stocks closed 235 points higher.

The broader market, meanwhile, posted its sharpest gains since March 17. The Nasdaq composite index climbed 48.40, or 3.6 percent, to 1,396.70. The Standard & Poor's 500 index rose 22.42, or 2.6 percent, to 880.90.

Today, U.S. ground forces charged into the "Red Zone," the Iraqi resistance surrounding Baghdad. A U.S. general said one of the key divisions defending the city of Kut had been destroyed.

That came after Iraqi satellite television broadcast statements attributed to Saddam. The leader did not appear in person, fueling speculation as to whether he might be wounded or dead, although state television later showed silent footage of Saddam meeting with Cabinet ministers.

U.S. troops also rescued Army Pfc. Jessica Lynch from Iraqi forces after she and her unit were ambushed March 23, helping to lift the spirits of investors concerned about allied casualties.

Stocks declined in recent days on investor worries that a prolonged war could threaten the nation's fragile economic recovery. But analysts have said Wall Street could quickly see gains should there be any signs of an immediate resolution.

"We were already a little bit oversold," said Todd Leone, trader at SG Cowen Securities. "Meanwhile, we were able to rescue the girl and people's perception of what's going on over there is much better, so investors are getting optimistic again."

Wolfe agreed, saying the market's recent declines represented a moderate pullback after the Dow notched a weekly gain of 8.4 percent two weeks ago, its best showing in two decades. He believes stocks should trade flat to higher in the coming days until the government's employment report is released Friday.

"Our sense is that there really is little in the next few days that will really dismantle the strength of the move here," Wolfe said. "The employment report will give us a clue as to how things are going."

Investors, meanwhile, shrugged off a Commerce Department report today showing U.S. factory orders declining by 1.5 percent in February, the largest drop in five months. The reading came after orders went up 1.7 percent in January; it also was worse than analysts' estimates.

Biogen climbed $3.70 to $33.99 after the biotech company raised its first-quarter earnings outlook, citing strong interest in its psoriasis drug. Other tech shares also gained, including Dow components Intel, which rose $1.10 to $17.52, and Microsoft, which increased $1.37 to $25.72.

Circuit City Stores rose 13 cents to $5.27 after reporting lower quarterly earnings that were in line with analysts' expectations.

Airline shares also advanced on the proposed federal bailout package, although a congressional leader said the Bush administration may oppose it. American Airlines surged $1.25, or 41.7 percent, to $4.25, while Continental increased 37 cents to $5.95 and Delta climbed 89 cents to $9.69.

But Northwest Airlines closed unchanged at $6.70 after Credit Suisse First Boston downgraded the company's stock to "neutral" from "outperform," citing concerns about dampened international travel due to the mysterious respiratory disease spreading in Asia.

National Instruments fell $4.72 to $30.28 after the maker of measurement and automation systems lowered its first-quarter outlook.

Advancing issues outnumbered decliners 10 to 3 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, rose 7.61, or 2.1 percent, to 376.30.