Stock Indexes Dip on News of Weapon Findings in Iraq
Major stock indexes sagged Thursday as growing worries about possible U.S. military action against Iraq put investors on edge and surging oil prices cast a shadow over the outlook for the economy and corporate profits.
The market headed lower after U.N. weapons inspectors in Iraq said they had discovered empty rocket warheads designed to carry chemical weapons, although a U.S. official later said it was no “smoking gun” that could mean war. Besides pushing up oil prices, the report sent gold soaring to a new six-year high.
“We’re all looking out for earnings, but a lot of the geopolitical stuff is coming into play,” said Brian Pears, head of equity trading at Victory Capital Management. The U.N. discovery was viewed as “evidence that could lead to war, and I don’t know that that’s a real positive for stocks right now.”
The tech-laden Nasdaq composite index fell 15.05 points, or 1.1%, to 1,423.75. The Dow Jones industrial average dropped 25.31 points, or 0.3%, to 8,697.87, and the broader Standard & Poor’s 500 index dipped 3.62 points, or 0.4%, to 914.60.
The overall market was mixed, with winners edging losers by a narrow 8 to 7 margin on the New York Stock Exchange. Losers led by 6 to 5 on Nasdaq. Trading was active.
In addition to concerns over Iraq, traders treaded cautiously ahead of results from Microsoft and IBM that came out after the end of the regular session. Microsoft fell 92 cents to $55.35 and IBM slid $1.54 to $86.05, both weighing on the Dow during the regular session.
After the closing bell, Microsoft reported higher earnings for its fiscal second quarter and announced its first-ever dividend, but also said sales would fall short of expectations in the current year. IBM’s profit fell for the sixth quarter in a row, but the company said sales of services and computer hardware rose. Both stocks fell more than 2% in after-hours trading.
Investors were looking for signs that the foggy corporate-profits picture is clearing. But Wall Street got a big letdown earlier in the week after chip giant Intel said it would cut capital spending in 2003, spurring worries business conditions are not fully on the mend.
Investors appeared to shrug off the day’s economic news. The government reported that new claims for unemployment benefits unexpectedly fell to their lowest level since November in the week ended Jan. 11, while the consumer price index rose slightly in December but ended the year on a tame note, indicating that inflation is not a serious threat.
War jitters kept oil prices near two-year highs, with crude rising 45 cents to $33.66 a barrel. And gold, a traditional haven in times of global strife, surged $7 an ounce to $358.10 in New York trading. Gold mining stocks rose, with the S&P; index of gold-related shares gaining nearly 4%.
Investors also fled the dollar, pushing the greenback to a new secure low against the euro and to its lowest level against the yen since September.
In other highlights:
* Dow stock United Technologies rose $1.81 to $66.21. It said net income rose 54% on robust sales of its Otis elevators in Asia and from easier comparisons in the year-ago period.
* Provident Financial Services, the most active on the NYSE, surged 55% in its market debut after the thrift reorganized as a public company. Provident was up $5.50 at $15.50.
* East West Bancorp of San Marino eased 14 cents to $37.86 in regular trading. After the close, the parent of East-West Bank said it was raising its quarterly dividend 48% to 10 cents.
* Corona-based Watson Pharmaceuticals gained $3.15, or 12%, to $30.28 after the drug maker said fourth-quarter profit rose more than expected.
* AmeriCredit fell 54%, losing $4.40 to $3.70, after the provider of auto loans reported a net loss that was triple expectations because more borrowers defaulted on loans. WFS Financial of Irvine, which buys and securitizes auto loans, fell $1.49 to $23.62
Market Roundup, C5-6
