Investors' war fears temper stock gains
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By Hope Yen
Associated Press
NEW YORK — Wall Street moved moderately higher today as investors selectively picked up bargains after two days of declines. But trading was muted by fears of a protracted military conflict with Iraq.
Analysts said volume was light, and the major indexes fluctuated throughout the day.
"Most people are still frozen and paralyzed with respect to news in the world with Iraq," said Keith Keenan, vice president of institutional trading at Wall Street Access, a New York-based brokerage firm.
The market remains vulnerable because "people who were expecting a war rally are starting to realize it may not materialize," he added. "Once it becomes apparent the U.S. is going to win the war with Iraq, investors will focus on the economy's fundamentals, which are weak."
The Dow Jones industrial average rose 70.73, or 0.9 percent, to close at 7,775.60, having declined 186 points over the previous two sessions to a near five-month low.
The broader market also finished higher. The Nasdaq composite index gained 6.63, or 0.5 percent, to 1,314.40. The Standard & Poor's 500 index rose 7.86, or 1 percent, to 829.85.
Investors fear tensions with Iraq and North Korea could weaken the U.S. economic recovery, leading to sharp declines in recent months. Indeed, many companies say they are refraining from additional business investments until there is some resolution of overseas conflicts.
The Dow is nearly 500 points above its five-year low of 7,286.27, reached on Oct. 9.
Still, Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia, noted that the main indexes in recent weeks have traded within a narrow range, and are currently at levels not much lower than they were a month ago.
"People are content to wait out this period of uncertainty until we see what action is taken in Iraq," he said. The more the Iraq situation drags on, "the more you'll have trading in this range."
Investors largely shrugged off an economic report today showing modest growth in the U.S. service sector. The Institute for Supply Management said its non-manufacturing index for February moved to 53.9, from 54.5 in January. Economists had expected a reading of 53.0.
Gainers included Kohl's, which climbed $3.29 to $49.55, after the retailer said it was comfortable with analysts' first-quarter profit expectations of between 36 cents and 40 cents a share.
Staples rose $1.05 to $17.65 after the office supply chain reported fourth-quarter profits that beat expectations by 2 cents per share.
But Dreyer's Grand Ice Cream slid $10.88 to $63.70 after the Federal Trade Commission moved to block its $2.8 billion merger with Nestle Holdings, a deal that would have created a combination controlling nearly two-thirds of the market for the richest, most expensive ice cream.
Costco Wholesale dropped 55 cents to $28.75 after the discounter posted fiscal second-quarter profit that fell below estimates.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange.
