NEW YORK, 2 March 2003 — Unable to keep upward momentum for stocks, Wall Street investors are hunkering down again awaiting the outcome of the Iraq crisis.
Breaking two weeks of gains, the Dow Jones industrials fell 1.58 percent for the week to Friday to end at 7,891.08 while the NASDAQ dipped 0.85 percent to 1,337.52 and the Standard and Poor’s 500 fell 0.83 percent to 841.15.
For February, the blue-chip Dow index fell 2.02 percent with a 1.7 percent loss for the S and P 500, but the NASDAQ managed to gain 1.26.
Analysts said stocks appeared to be stuck in a pattern of alternating gains and losses with investors paralyzed over the Iraqi crisis.
Larry Wachtel of Prudential Securities said the market appears to be stabilizing but is unable to get traction. “Unlike the three-week freefall from Jan. 17 to Feb. 7, the last three weeks have been more two-sided, win a few, lose a few,” Wachtel said.
Investors brushed aside positive economic data over the past week, including a surprising 3.3 percent gain in January durable goods orders and an upward revision to US economic growth showing expansion at a 1.4 percent pace.
Lynn Reaser at Banc of America Capital Management said the geopolitical situation remains on the front burner, with investors waiting for the air to clear on Iraq before further committing to stocks. “The mounting risk of war with Iraq continues to dull investors’ appetites for stocks,” she said.
Steven Wieting at Salomon Smith Barney said it is hard to get a handle on economic or corporate forecasts until the Iraqi crisis is resolved. “Short-term forecasts for the economy and earnings are as ‘good or bad’ as the resolution of the Iraq issue,” Wieting sad.
“While Iraq is not the only, or even most important challenge for the US economy looking a year out, it is a rather large issue for now. We’ve counted on significant energy cost increases in the near term, but current trends seem likely to outstrip what we’ve embedded, and much business, especially in the financial sector, seems likely to be pushed out until the Iraq situation is under control.”
Among active shares, Dutch retail giant Ahold shares plunged 65.39 percent to 3.70 after disclosing accounting irregularities that are under investigation by US and EU authorities.
Hewlett-Packard slumped 12.77 percent to $15.85 after its disappointing earnings results.
Lucent jumped 7.89 percent to $1.64 after settling an accounting probe with the Securities and Exchange Commission. The retail sector was hurt by snowstorms in the eastern US, with Wal-Mart off 1.72 percent to $48.06, J.C. Penney down 2.41 percent to $19.85 and Sears shedding 0.28 percent to 21.78.
Bonds firmed, as the yield on the 10-year bond eased to 3.779 percent from 3.893 percent a week earlier and on the 30-year bond to 4.756 percent against 4.849 percent.
Meanwhile, British stock markets look set for another busy week next week as investors await a crucial report by UN weapons inspectors, two European interest rate decisions and another batch of company results.
After nudging up in each of the three previous weeks, the FTSE 100 index of leading shares reverted to trend, falling 71.5 points, or 1.9 percent, to close on Friday at 3,655.6 points. “I think that Iraq’s still the dominating issue,” said BNP Paribas analyst David Thwaites.
“Corporate news does have an impact but it’s very much pushed into the background. So I’d have thought that the markets are going to stay on the back foot until we get some clear news from Iraq one way or the other and I can’t really see that happening next week,” Thwaites added.
