Middle East conflict cuts into stock gains
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By Amy Baldwin
Associated Press
NEW YORK — Investors held to their pattern of retreating after even a moderate advance, sending stocks sharply lower today amid ongoing concerns about Iraq. Hewlett-Packard's report of weaker-than-expected revenue also contributed to the decline, which more than wiped out the previous session's gain.
The downturn wasn't surprising as selloffs have been the norm for weeks. Analysts say stocks can't be expected to move upward until it's clear whether there will be a war with Iraq and what impact there will be on the U.S. economy.
"The conflict in the Middle East is on the forefront of everyone's mind," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston. "We are just sort of battening down the hatches and trying to figure out what is going to go on in the Middle East. The hope in the back of everyone's minds is there is a quick resolution and that businesses and consumers start spending again and give investors some faith in the market."
The Dow Jones industrial average closed down 102.52, or 1.3 percent, at 7,806.98, according to preliminary calculations. The loss easily erased yesterday's gain of 51.26. It was the Dow's second triple-digit loss in three days, following Monday's decline of 159.87.
The broader market also retreated. The Nasdaq composite index fell 25.32, or 1.9 percent, to 1,303.66. The Standard & Poor's 500 index declined 11.02, or 1.3 percent, to 827.55.
Selling has dominated Wall Street in 2003, with the only exception being a short-lived New Year's rally. Many analysts don't expect the mood to improve until there is a resolution regarding Iraq.
"I have rarely seen this much pessimism not turn into a rally. But it is just hard to be positive," said Mike Weiner, managing director of equities at Banc One Investment Advisors in Columbus, Ohio.
Analysts said investors were still smarting from a bigger-than-expected drop in consumer confidence, reported yesterday by the Conference Board. Consumer confidence in February fell to its lowest level since October 1983. The Dow fell as much as 138 points yesterday following the report but managed to pull together a late-day rally due to bargain hunting.
Federal Reserve Chairman Alan Greenspan said during testimony today before the Senate Banking Committee that the plunge in confidence was "a very significant decline" but not a surprise.
Disappointing earnings reports contributed to today's slippage. H-P was the Dow's biggest loser, dropping $2.81 to $15.37, having reported quarterly earnings late yesterday that met analysts' expectations but revenue that missed forecasts.
Eaton Vance declined 87 cents to $25.23 after the mutual fund and investment management company reported fiscal first-quarter earnings that were 3 cents short of analyst's expectations.
Among other losers, Morgan Stanley fell 75 cents to $35.42 after The Wall Street Journal reported the brokerage house could face charges in an initial public offering investigation.
Gainers included Urban Outfitters, which rose $1.60 to $18.60 after Fulcrum upgraded the retailer to "buy" from "neutral."
Declining issues outnumbered advancers 9 to 5 on the New York Stock Exchange, where trading was light.
The Russell 2000 index, the barometer of smaller company stocks, fell 3.22, or 0.9 percent, to 357.98.
Overseas, Japan's Nikkei stock average finished Wednesday down 3.7 percent. In Europe, Britain's FTSE 100 declined 0.8 percent, France's CAC-40 fell 0.9 and Germany's DAX index lost 1.4 percent.
