Oil Prices Soar on Iraq News; Stocks Mixed
Oil prices surged ahead of Wednesday’s U.S.-led attack on Iraq, while the U.S. stock market closed mixed but mostly lower.
At midday today in Asia, meanwhile, stocks were down sharply in the wake of the new conflict.
On Wall Street, the Dow Jones industrial average eased 32.70 points to 8,790.60, up from the day’s low of 8,740.
A few broader indexes edged higher, though the Nasdaq composite slipped 3.24 points to 2,009.36 despite another round of big gains in many Internet stocks.
Falling stocks outnumbered winners on both the New York Stock Exchange and Nasdaq.
The market didn’t care all that much about a sharp jump in crude oil prices, as the White House signaled early in the day that an attack on Iraq was all but assured.
Near-term crude futures in New York ended up 83 cents, or 7.2%, at $12.38 a barrel, recovering somewhat from recent 12-year lows.
As the markets were closing, word leaked out that President Clinton had indeed alerted Congress that he had decided to order airstrikes against Iraq in response to Saddam Hussein’s continued defiance of U.N. arms inspectors. By the time a White House spokesman confirmed the airstrikes had begun, the market was closed.
Some analysts said the market’s mood might even have improved late in the day because the impending attack would delay the House’s impeachment vote.
But House leaders said the vote would be Friday or Saturday.
Fundamentally, Wall Street is wrestling not only with the threat of a potentially destabilizing trial of Clinton in the Senate, but also with the growing number of companies warning that near-term earnings will be weaker than expected.
That list lengthened Wednesday as industrial and consumer products giant 3M, reversing a forecast made two months ago, said its fourth-quarter profit would drop by about 10% from a year earlier because of slow sales and unfavorable foreign currency exchange rates.
The stock, one of the Dow 30 issues, fell $2.38 to close at $71.38.
While the prospects of war and impeachment don’t help, “the main concern is earnings at this stage,” said Jim Griffin, market strategist at Aeltus Investment Management in Hartford, Conn.
In other markets Wednesday, “safe haven” buying ahead of the U.S. attack lifted the dollar and sent Treasury bond yields lower.
The 30-year T-bond yield ended at 5%, down from 5.03% on Tuesday. The two-year T-note yield fell to 4.35% from 4.45%.
At midday today in Asia most stock markets fell on jitters over Iraq. Tokyo’s Nikkei-225 index was off 0.9% to 13,963, South Korean stocks were down 2.8% and the Taiwan market fell 1.8%.
Among Wednesday’s highlights:
* Industrial stocks followed 3M lower. Caterpillar sank $3.06 to close at $41.38 one day after issuing a profit warning.
Other losers included Emerson Electric, down $1.13 to $59.63; Dupont, down $2.13 to $51.75; and United Technologies, down $2.31 to $99.06.
* Energy-related stocks rose across the board, led by Exxon, up $1.56 to $75.56; Halliburton, up $2.13 to $33.63; Enron, up $1.69 to $55.13; and ENI, up 75 cents to $62.38.
* Some defense stocks also were winners. General Dynamics rose $2.44 to $55.94; Lockheed Martin gained $1.38 to $95; and Northrop Grumman gained $2.81 to $73.44.
But Boeing lost $1.19 to $32.13.
* Internet stocks were led by Amazon.com, which rocketed $46.25 to a record $289. Other winners included Ebay, up $29.50 to $223.50; Yahoo, up $7.13 to $205.13; America Online, up $3.44 to $96.19; and Infospace.com, up $6.75 to $26.75.
* Bigger tech names were mostly lower. BMC Software fell $3.06 to $39.75; Intel lost $1.81 to $114.13; and Compaq fell $1.13 to $40.69.
Market Roundup, C12
