- The Washington Times - Thursday, February 13, 2003

NEW YORK (AP) Investors fell deeper into their morass of fear about terrorism and war with Iraq yesterday, sending stocks lower for a second straight day.
Wall Street has been stymied by ongoing worries that a war would undermine an already fragile economy. Investors' concerns about the economy increased yesterday after Federal Reserve Chairman Alan Greenspan questioned the Bush administration's proposed tax cuts.
The market built on Tuesday's losses, which followed the release of an audiotape presumably of Osama bin Laden vowing solidarity with Iraq. Analysts don't expect stocks to make much upward progress until it is clearer whether there will be a war and how successful the United States will be.
"No one is willing to commit themselves. … It is a market that is drifting, and drifting one way only, and that is down," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
The Dow Jones Industrial Average closed down 84.94, or 1.1 percent, at 7,758.17, having shed 77 points on Tuesday.
The broader market was also lower. The Nasdaq Composite Index fell 16.50, or 1.3 percent, to 1,278.96. The Standard & Poor's 500 index declined 10.52, or 1.3 percent, to 818.68.
The market's losses were partly due to Mr. Greenspan's testimony before the House Financial Services Committee. The Fed chairman questioned President Bush's new $1.3 trillion package of tax cuts, saying it would worsen an already bad outlook for the federal deficit.
Mr. Greenspan told a Senate committee Tuesday that uncertainties about a war with Iraq poses the biggest risk to the economy.
Investors' biggest fears have to do with Iraq and terrorism, analysts said. The Bush administration on Friday raised the national terror alert to orange from yellow, citing a U.S. intelligence warning of a high risk of terrorist attack. The highest alert level is red.
"It is now a market of Iraq, bin Laden and terrorism," Mr. Cardillo said.
The effect of war worries is apparent, analysts said, in how investors disregarded fourth-quarter earnings that were, on the whole, better than had been expected.
Investors have put off improving market fundamentals, lamented Ned Riley, chief investment strategist at State Street Global Advisors.
"Main Street investors remain extremely risk adverse, and that has manifest itself in a lack of money going into the equity market," Mr. Riley said.
Among yesterday's losers on Wall Street, General Motors fell $1.56 to $33.99 after Banc of America Securities lowered its recommendation on the automaker to "sell" from "neutral."
El Paso dropped $1.07 to $3.65 after Moody's Investors Service downgraded its debt rating on the energy company by five notches. El Paso also said Chairman and Chief Executive William A. Wise was stepping down.
And, Chiquita Brands slid $4.29 to $10.01 the day after the company said cost-cutting measures had a minimal effect in 2002, because the costs were not taken out until late in the year. Chiquita also said it might undertake additional restructuring activities related to a recently completed acquisition.
Gainers included Coca-Cola, which rose 74 cents to $39.74 after releasing fourth-quarter earnings that met Wall Street's expectations.
Declining issues outnumbered advancers slightly more than 5 to 2 on the New York Stock Exchange. Trading volume was extremely light at 1.33 billion shares, compared with 1.68 billion on Tuesday.

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