Dow Dives 42.33 as Hussein Rattles the Market Again

Iraqi President Saddam Hussein’s call Friday for a pan-Arab rebellion sent the U.S. stock markets into disarray again, bringing to a cheerless end the market’s fourth-straight losing week.

The Dow Jones industrial index, which had advanced 48 points Wednesday and Thursday, surrendered 42.33 to close at 2,716.58. The Dow thus gave up 93.07 points, or 3.3%, for the week; it has surrendered 9.4% of its value since reaching an all-time high July 16 and 17.

Only precious-metal shares and a few oil stocks did well. Investors seemed less eager to buy even the high-growth blue chips that had been the target of bargain hunting for the past two days.

Volume was a modest 145.34 million shares, compared to 155.81 million on Thursday, as traders lightened their portfolios so they wouldn’t be badly hurt by surprise developments over the weekend.

The light volume maximized the effect of the computer-directed program trading that began in the early afternoon, just after Hussein’s remarks were read on Iraqi television.

In his speech, Hussein called for a holy war against the non-Arab troops in the Persian Gulf and a rebellion against the Saudi king to seize the holy city of Mecca. An announcement later from Cairo that a majority of Arab leaders had agreed to send troops to help the Saudis did little to help stocks rebound, analysts said.

“What the market really needs to know is what Hussein will do next, and the speech made it sound like it wouldn’t be good,” said Hildegard Zagorski, market analyst with Prudential-Bache Securities in New York.

Among the broader indexes, the S&P; 500-stock index slid 4.42 points to 335.52, for a loss of 1.3%. The New York Stock Exchange composite index was off 2.09 to 184.15. For the week, the S&P; 500 was off 2.7% and the NYSE composite index surrendered 2.5%.

The NASDAQ composite index for the over-the-counter market fell 4.95 to 408.03. At the American Stock Exchange, the market-value index closed at 339.32, down 2.17.

Market analysts again offered only forecasts based on a premise that the Persian Gulf situation will stabilize. “If it begins to appear there’s more stability in the next few days, then the institutions will start buying again,” said Trude Latimer, analyst with the Josephthal & Co. brokerage in New York. “If there’s military developments, there’s no predicting.”

The decline again caused the New York Stock Exchange to impose one of its “circuit breaker” rules to calm a chaotic market. After the Dow had dropped 50 points by about 1:30 p.m. EDT, the Big Board said traders couldn’t execute the stock portion of index arbitrage trades except after stock price upticks.

Highlights among specific stocks included:

* Oil issues were mostly higher. Texaco rose 1/4 at 63 1/8, Chevron was up 1 1/8 at 78 and Pennzoil was up 1/2 at 81 3/8. But Amoco was down 1 at 55 3/4 and Exxon lost 1/4 to 51 5/8.

* Precious-metals stocks rose as gold prices jumped higher. Hecla Mining was up 1/2 at 12 1/4, Placer Dome rose 7/8 to 17 7/8, Newmont Gold was up 2 at 51 1/8, Homestake Mining was 1 1/2 at 21 7/8 and ASA Ltd. was up 1 3/4 at 52 3/4.

* Among other actively traded Big Board issues, IBM was down 1 1/4 at 102, Wal-Mart was off 3/4 at 29 7/8, Boeing lost 1 1/4 to 53 1/4, Eli Lilly was down 2 3/4 at 75 1/4 and Unitel was up 1 1/8 at 26 1/2.

* Argonaut, the L.A.-based insurer, was flat at 72. Goldman Sachs said it has a 5.5% stake, bought for investment purposes.

In Tokyo, stocks sank to their lowest close of the year. The Nikkei index of 225 issues lost 286.18 points, or 1.04%, to close at 27,329.55 in quiet trading. It fell 2,186.21 points, or 7.4%, for the week.

In London, share prices ended on a relatively quiet note after a nervous and hectic week with all eyes on the Middle East. The Financial Times 100-share index gave up 11.1 points to close at 2,233.8. It lost 50.8 points, or 2.2%, for the week.

In Frankfurt, West Germany, stocks ended mixed, with the 30-share DAX index down 6.29 points to close at 1,749.34, by far the smallest one-day swing this week--a period in which the index has lost more than 90 points, or 5% in value.