Stocks Dip on Fears of a Long War; Oil Prices Surge Back
Stocks drifted down in lackluster trading Thursday as investors worried that a long war in Iraq and rising oil prices would throw another roadblock in front of the feeble U.S. economic rebound.
“People are sensing the economic slowdown could be prolonged, and a lengthy war could make it worse,” said Joseph Zock, president of Capital Management Associates.
President Bush and British Prime Minister Tony Blair vowed Thursday to wage war for as long as it took to oust Iraqi President Saddam Hussein.
Stiff Iraqi resistance has raised questions about how long the fighting might last. A Washington Post article Thursday quoted military officers saying the war probably will last for months.
Major market gauges pared losses earlier in the day but still finished lower. The Dow Jones industrial average, down 125 points in the early going, closed off 28.43 points, or 0.4%, at 8,201.45.
The Standard & Poor’s 500 index dipped 1.43 points, or 0.2%, to 868.52. The tech-laden Nasdaq composite edged down 3.20 points, or 0.2%, to 1,384.25.
Advancing stocks outpaced decliners by 6 to 5 on the New York Stock Exchange, but losing stocks roughly matched winners on Nasdaq. Trading was restrained, as it has been all week.
Wall Street is scaling back earlier expectations for a swift war as worries over the health of the U.S. economy are resurfacing. Anticipation of a quick war propelled the Dow to its best weekly gain in more than 20 years last week, but caution is creeping back as the war progresses.
A government report Thursday showed that growth in the U.S. economy braked sharply at the end of last year. The Commerce Department reported that gross domestic product rose at an annual rate of 1.4% in the fourth quarter, after rising at a robust 4% rate in the third.
A separate report on initial claims for jobless benefits suggested that businesses were reluctant to hire workers with war clouding the outlook.
“Some people will make bigger moves when they really see an endpoint. The issue is how long will the war take,” said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Banking.
Oil prices, meanwhile, soared back above $30 a barrel as signs of a protracted war in Iraq fueled fears of shortages, with Nigerian crude exports crippled by political unrest. Near-month crude futures, which hit a recent top of $37.83 on March 12 before sliding as the U.S. moved toward war with Iraq, rebounded $1.74 to $30.37 in New York trading.
In other highlights:
* Shares of oil field services companies jumped on the higher crude prices. Baker Hughes tacked on 82 cents to $30.41, Halliburton jumped 81 cents to $21.50 and BJ Services climbed $1.22 to $34.75.
* Most defense stocks gained ground. Northrop Grumman rose $2.01 to $85.70, Lockheed Martin added $1 to $47.25 and DRS Technologies was up 87 cents to $25.12.
* RSA Security surged $1.40 to $7.91 a day after the stock was pounded because of a news report that the U.S. government had stepped up a probe of the computer security firm. RSA said the report was erroneous.
* Pediatrix Medical Group tumbled $6.20, or 21%, to $23.30. The company, a provider of contract management for hospital-based neonatal and pediatric intensive care units, said its chief executive had resigned for personal reasons and that its founder and chairman would take over those duties.
* Continental Airlines fell 44 cents to $5.45 after saying it expected to report significant first-quarter and full-year losses. Air traffic has declined because of the war in Iraq and fears of terrorism.
Market Roundup, C6-7