Posted at 12:00 p.m., Wednesday, February 5, 2003
Stocks move lower after Powell speech
By Hope Yen
The market drifted higher shortly after Powell's remarks on bets of a quick resolution of the situation with Iraq. But investors changed course later in the day as they pondered the impact of a war on the nation's shaky economic recovery.
"The market is responding to a strong presentation by Colin Powell," said Barry Berman, head trader for Robert W. Baird & Co. "Everybody's trying to guess what the reaction is going to be whether other countries will get on board."
The Dow Jones industrial average fell 28.11, or 0.4 percent, to close at 7,985.18, having declined 96 points in the previous session. Earlier in the day, blue-chip stocks rose as much as 139 points.
The broader market also finished modestly lower. The Nasdaq composite index declined 4.66, or 0.4 percent, to 1,301.49. The Standard & Poor's 500 index dropped 4.61, or 0.5 percent, to 843.59.
Powell, making his case that Iraq had evaded demands that it disarm, said various tape recordings and satellite photos represented "irrefutable and undeniable" evidence that Saddam Hussein is hiding weapons of mass destruction.
Analysts said the speech seemed to convince some investors that the United States was headed closer to war, a development that would eliminate the uncertainty pressuring the market but also raises questions about the economic impact.
"There's a perception with the case made today, that the Iraq question doesn't carry on another six months," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "The market is putting the time frame closer."
Investors also were anxious about the amount of support the United States had from other members of the U.N. Security Council, analysts said. Of the 15 Council members, only the United States and Britain have voiced support for forcibly disarming Saddam.
Gainers included Dow component Alcoa, which rose 67 cents to $19.84, after Prudential upgraded the aluminum maker's stock rating to "buy" from "hold."