Stocks Fall as War Rumors Continue to Drive Trading
Stocks ended lower after a seesaw session Wednesday as investors examined grainy television footage and sporadic headlines from the battlefront for clues on the progress of the U.S.-led war to oust Saddam Hussein.
“The market’s very skittish and trading off of every rumor and every bit of news out of Iraq,” said Todd Clark, head of listed trading at Wells Fargo Securities in San Francisco. “Uncertainty is causing a lot of long-term investors to not be involved.”
Also reflecting unease about the war, Treasury bond yields slipped while oil and gold rose.
Tensions were high on reports that a large column of elite Republican Guard units streamed out of Baghdad toward U.S. forces massed near the southern Iraqi city of Najaf. .
“It looks like there could be some sort of major confrontation here,” said David Memmott, head of listed block trading at Morgan Stanley in New York. “Obviously, casualties are a concern.”
The Dow Jones industrial average ended the day down 50.35 points, or 0.6%, at 8,229.88. The Standard & Poor’s 500 index retreated 4.79 points, or 0.6%, to 869.95 and the tech-laden Nasdaq composite index slipped 3.56 points, or 0.3%, to 1,387.45.
Losers edged winners by about 9 to 7 on the New York Stock Exchange and Nasdaq in meager trading.
The Dow fell nearly 93 points in the early going, partly on rumors that the terror alert was being raised in New York City. But city officials quickly knocked down that speculation, and the market trimmed its losses.
“There are rumors and fears and scares, and every time there’s something that’s scarier than the thing before, you dip, and then you come back up,” said Donna Van Vlack, trading chief at Brandywine Asset Management in Wilmington, Del.
Stocks had wobbled near unchanged much of the day after government reports showed a drop in durable-goods orders and new-home sales in February, raising worries about the health of the nation’s economy once the war in Iraq has ended.
“While today’s economic numbers are having a slight negative impact on the market, it’s the war factors that are really taking over,” said Peter Cardillo, director of research at Global Partners Securities in New York.
Last week, the Dow scored its best weekly gain in more than 20 years as hopes mounted for a swift end to the Iraq war. Investors are scaling back those expectations as Iraqi troops fight back and the number of U.S. and British casualties grows.
A poll by the Pew Research Center for the People and the Press found that 38% of those surveyed on Monday thought the war was going well, down from 71% last Friday.
The retreat from stocks has drawn money into Treasury securities, driving down yields. The yield on the benchmark 10-year Treasury note, which hit a recent high of 4.10% on Friday, dipped to 3.93% from 3.94% Tuesday.
In commodities trading, oil gained 66 cents a barrel to $28.63 and gold added $1.90 to $330.30 an ounce, both in New York futures trading.
Meanwhile, the dollar rose against the yen and weakened against the euro.
In other highlights:
* Sears Roebuck, the largest U.S. department store chain, jumped $2.69, or 12.5%, to $24.14 and ranked as the most active stock on the NYSE. The company said it was evaluating several alternatives that may include a sale of its $30.8-billion credit card portfolio, which has been plagued by rising defaults.
* Some heavy-industry stocks were hit after the Commerce Department reported that orders for durable goods fell in February for the third month in four. Weyerhaeuser lost $1.01 to $49.07, Deere was off 92 cents to $40.02 and Caterpillar dropped 80 cents to $50.20.
* Shares of some power companies sank after regulators raised the amount they must refund to California to $3.3 billion from $1.8 billion. Mirant lost 25 cents to $1.56, Dynegy fell 19 cents to $2.33 and Reliant Resources slumped 95 cents to $3.05.
* Verizon Communications fell 20 cents to $36.07 after a Bear Stearns analyst reduced his 2003 earnings estimates for large U.S. phone companies, citing increased competition and concern that they won’t benefit “significantly” from an economic recovery.
* Drug maker Andrx surged $1.45, or 14.4%, to $11.53 and ranked among Nasdaq’s most-active issues. Investment bank UBS Warburg raised its rating on the company to “buy,” citing promising drugs and an expected profit improvement.
* Amerco, the parent of truck rental company U-Haul International, leaped $1.40, or 46.4%, to $4.42. The company said it received a four-year credit line that will let it borrow up to $866 million to refinance debt and avoid a possible bankruptcy filing.
* Valero Energy fell $1.37 to $40.05 after the oil refiner said it plans to sell up to 6.3 million shares of common stock, worth about $250 million, to pay debt and make potential acquisitions.
* Anadarko Petroleum, the fifth-largest U.S. oil producer by market value, dropped 69 cents to $44. The firm said Tuesday after the closing bell that Chief Executive John Seitz resigned after failing to boost the company’s share price. Some analysts were puzzled by the move.
Market Roundup, C7-8
