Wall Street Can’t Shake War Fears
Stocks staggered to their fourth straight weekly loss Friday as the threat of war with Iraq, heightened terrorism concerns and lackluster profit forecasts overshadowed surprisingly strong U.S. jobs data.
President Bush’s warning that “the game is over” for Iraqi President Saddam Hussein and his statement that the United Nations must make up its mind soon on whether to back its demands that Iraq disarm kept investors on edge.
“It’s very difficult to look at just fundamentals right now. There’s really no way to interpret this market ex-Iraq,” said Brian Pears, head of equity trading at Victory Capital Management.
“Until Iraq is out of the way, all people see is the fog that we’re shrouded in,” he said.
U.S. officials’ decision Friday to raise the nation’s threat assessment to the second-highest level because of a higher risk of terror attacks contributed to the market’s jitters.
A closely watched employment report that showed a drop in the unemployment rate and a rise in the number of workers on nonfarm payrolls sparked an early rally, but edgy investors’ buying enthusiasm quickly faded.
The blue-chip Dow Jones industrial average fell 65.07 points, or 0.8%, to 7,864.23, while the Standard & Poor’s 500 index lost 8.46 points, or 1%, to 829.69.
Both indexes closed at their lowest levels since Oct. 10. The technology-laden Nasdaq composite index fell 19.26 points, or 1.5%, to 1,282.47, its worst close since Oct. 17.
Losers led winners by about 2 to 1 on the New York Stock Exchange and nearly 2 to 1 on Nasdaq in moderate trading.
All three key market gauges racked up their fourth straight week of declines, with the Dow down 2.4% and the S&P; 500 and Nasdaq both down about 3% for the week, pushing them ever closer to multiyear lows hit in early October.
Dell Computer joined a flood of companies giving cautious corporate outlooks. The No. 2 personal computer maker fell 68 cents to $23.34 after saying Thursday that corporate spending on technology would be soft this year because of the weak economy and concerns about a potential U.S. war with Iraq.
Party City, the largest U.S. party goods chain, tumbled $2.96, or 26%, to $8.61. The company reported a slight increase in fiscal second-quarter income but warned that full-year results would fall short of Wall Street estimates.
Cigna, one of the biggest U.S. health insurers, provided a bright spot, surging 10% after saying its quarterly net income sank 75% under the weight of charges but still managed to beat Wall Street expectations for the quarter. It climbed $3.80 to $43.02.
Bond yields surged immediately after the jobs report but quickly retreated as doubts about the data’s reliability set in and news of the government’s warning about the heightened risk of an attack scared investors back into bonds.
The yield on the benchmark 10-year Treasury note closed at 3.93%, down from Thursday’s close of 3.94%.
Corning, the world’s No. 1 maker of fiber-optic cable, rose 37 cents to $4.57 after it forecast a return to profitability in the third quarter.
In Europe, stocks mostly fell as investors dwelt on the looming threat of war and the struggling European economy.
Germany’s DAX index fell 3% to a 6 1/2-year low.
Market Roundup, C4-5
