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The Honolulu Advertiser

Posted on: Monday, December 15, 2003

Saddam capture unlikely to have lasting effect on stocks

By Hope Yen
Associated Press

NEW YORK — The capture of Saddam Hussein will give an added boost to a Wall Street already bullish after the Dow Jones industrials recently pushed through the 10,000 barrier, analysts said.

"Psychologically, the news is nothing but good. There's no doubt the world market will rally off that," said Gary Kaltbaum, head of Kaltbaum & Associates, a money management firm in Orlando, Fla.

The news is likely to push the dollar higher and could send crude oil prices lower when trading resumes today, as the Iraqi supply had been curtailed because of widespread infrastructure problems. Many believe Saddam's capture might help stabilize the country and boost oil production and exports.

Still, analysts said Saddam's capture will have no lasting effect on financial markets.

"I don't think anybody will believe that because we've captured Saddam, the war in Iraq or the war on terrorism is over," said Hugh Johnson, chief investment officer at First Albany Corp. "The market response, I think, will be positive, but in my judgment somewhat subdued."

In Asian trading today, the dollar was strong against major currencies. The euro was trading at $1.2143 compared with Friday's New York close at $1.2275, while the dollar was worth 108.33 yen against its New York close at 107.86 yen.

Still, Kaltbaum also was less certain about the long-term impact on stocks, explaining that valuations are a bit high. Last week, the Dow closed above 10,000 for the first time since May 2002 on a batch of strong economic data and Federal Reserve minutes suggesting higher interest rates weren't coming anytime soon.