Stocks in modest decline after war reports
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By Amy Baldwin
Associated Press
NEW YORK — Wall Street fluctuated and closed modestly lower today as investors reacted to disquieting developments in the war in Iraq. Traders also collected profits from yesterday's advance and last week's big rally.
Stocks tumbled on reports that Iraq appeared prepared to use chemical weapons and on a warning from President Bush that the conflict is far from over.
Still, the market's weakness wasn't surprising given the stunning rise stocks made just before and soon after war began on March 19. Analysts say stocks will continue to run into resistance as long as the outcome in Iraq is uncertain and that investors' biggest concern is that the conflict will drag on longer than they'd anticipated.
"We are getting to the reality of what war is," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati.
The Dow Jones industrial average closed down 50.35, or 0.6 percent, at 8,229.88, according to preliminary calculations. The Dow traded lower for most of the session, falling as much as 92.50, although briefly turned positive, eking out a gain of 4.76.
Trading has been erratic since the war in Iraq began last Wednesday. Yesterday, the Dow gained 65 points, although Wednesday's slippage wiped out much of that advance. Stocks dropped 307 points on Monday in a pullback that was expected after a 997-point gain over the previous eight sessions.
The broader market also pulled back. The Standard & Poor's 500 index declined 4.79, or 0.6 percent, to 869.95. The Nasdaq composite index fell 3.54, or 0.3 percent, to 1,387.47.
Trading was light, as it was for weeks leading up to military action in Iraq, indicating that many investors simply aren't participating on Wall Street.
Stocks have mostly pulled back this week amid concerns that the war in Iraq will take longer than investors anticipated, posing a threat to an already shaky economic recovery. Last week's rally was based on optimism about a short war.
President Bush added to investors' war worries today, saying the conflict is far from over and warning that U.S.-led forces will face "the most desperate elements of a doomed regime" as they close in on the Iraqi capital Baghdad.
"The road to Baghdad appears to be one which could take a difficult turn in terms of timing and casualties. The closer the coalition comes to Baghdad, the more intense fighting is likely to become. The market remains sensitive to any (news) reports," said Alan Ackerman, executive vice president at Fahnestock & Co.
Investors were also unnerved when Brig. Gen. Vincent Brooks told reporters 3,000 chemical suits had been found in a hospital in central Iraq, heightening fears that Saddam Hussein's regime was ready to use chemical weapons.
Today's economic news provided no comfort for investors, showing that business remains weak.
The Commerce Department reported that orders to U.S. factories for big-ticket goods fell by 1.2 percent in February, the biggest decline in three months. Still, the reading was better than expected as economists had predicted that orders for durable goods — products expected to last at least three years — would decline by 1.5 percent.
