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The Honolulu Advertiser

Posted at 11:49 a.m., Monday, February 24, 2003

Iraq tensions send stocks into slide

Hawai'i Stocks
Updated Market Chart

By Hope Yen
Associated Press

NEW YORK ­ Wall Street posted its biggest decline in a month today as the United States and Britain submitted a new U.N. Security Council resolution authorizing war against Iraq. Retail stocks also sagged on forecasts of sluggish sales.

The three main market indexes fell for their third session in four as investors avoided stocks. Trading was light.

"It's continuing concerns about Iraq and that Iraq will fail to comply with a U.N. order to destroy missiles," said Alan Skrainka, chief market strategist at Edward Jones of St. Louis. "Retailers are weak given the lack of confidence among consumers and investors."

The Dow declined 159.87, or 2 percent, to close at 7,858.24, having gained 1.4 percent last week. It was the biggest one-day drop for the Dow since Jan. 30.

The broader market indexes also saw their biggest point declines since Jan. 30. The Nasdaq composite index dropped 26.65, or 2 percent, to 1,322.37, having advanced 3 percent last week. The Standard & Poor's 500 index fell 15.59, or 1.8 percent, to 832.58, following a weekly increase of 1.6 percent.

The United States and Britain introduced to the Security Council today a resolution that declares Iraq has violated its obligations to disarm, while France, Germany and Russia submitted a counterproposal for step-by-step disarmament of Iraq.

The government of Saddam Hussein, meanwhile, has withheld a decision on a U.N. order to start destroying its Al Samoud 2 missile program by the end of the week.

Analysts say concerns about war and terrorism have pressured the market, sending stocks to four-month lows earlier this month. Wall Street has seen some recent gains on bouts of bargain-hunting.

"Investors are discouraged and fearful, but the mood on Wall Street can change very quickly," Skrainka said, adding that he believes the market will see advances once questions with Iraq are more fully resolved.

John C. Forelli, portfolio manager for Independence Investment LLC in Boston, agreed.

"We've got a jumpy market waiting for the conflict to take place," he said. "Depending on the sentiment of the day, investors can think the worst case is already baked in, and another day think things can get even worse."

Retailers, meanwhile, fell after several reported that severe winter weather will depress February sales. Wal-Mart lost $1.26 to $47.64, while Federated Department Stores dropped 76 cents to $24.82, and J.C. Penney declined 95 cents to $19.39.

Ahold tumbled $6.53, or 61.1 percent, to $4.16 after the global grocery store operator said it overstated earnings in 2001 and 2002 by at least $500 million and that its leading executives will resign.

Declining issues outnumbered advancers 5 to 2 on the New York Stock Exchange. Volume was light.