- The Washington Times - Friday, March 28, 2003

NEW YORK, March 28 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market were little changed in cautious pre-weekend trading at midday Friday as more evidence emerged that the conflict with Iraq could stretch over months.

The blue-chip Dow Jones industrial average, which lost 28.43 points Thursday, was down 5.50 points to 8,195.90. The tech-heavy Nasdaq composite index, which slipped 3.29 points in the previous session, was down 0.73 points to 1,383.52.

The broader New York Stock Exchange composite index was ahead 2.05 to 4,831.75, the Standard & Poor's 500 index was ahead 0.55 to 869.07, the American Stock Exchange composite index was ahead 5.52 points to 829.84 and the Wilshire 5000 Index was down 1.48 to 8,222.56.

Big Board volume fell to an estimated 459 million shares from the 501 million shares changing hands during the same period Thursday while Nasdaq volume declined to an estimated 482 million shares from 553 million shares.

Analysts said with last week's euphoria over the war all but forgotten, Wall Street is now girding itself for a longer war than it initially expected as more evidence emerged suggesting the conflict with Iraq could stretch over months.

Stocks fell from the opening bell amid the increasing signs that the war in Iraq won't reach the speedy resolution that Wall Street had been bargaining for at the opening stages of the conflict.

Investors are growing increasingly concerned that the war effort could take much longer than previously thought, and that a prolonged struggle could lead consumers and business to rein in their spending.

In a week where resistance from Iraqi forces intensified and an expected citizen uprising in Basra failed to materialize, United States defense officials were left scrambling to assure Americans that their timetable for the removal of Saddam Hussein's regime remained on track.

U.S. Central Command said that they stuck by their initial assessment of Iraq's military strength, after a U.S. general in the field said that unexpected tactics used by Iraqi fighters had complicated efforts to move supplies through the battlefield and slowed the campaign.

British Prime Minister Tony Blair said the war will have its "tough and difficult moments." Gen. William Wallace, the U.S. Army's senior ground commander in Iraq, said that long supply lines and the guerrilla-style tactics of the Iraqi forces have reduced the likelihood of the quick war U.S. military officials planned.

And, the biggest bombs dropped on Baghdad so far, two 4,700-pound "bunker busters," struck a communications tower in an intense U.S. bombardment. In the south, British officers said Iraqi fighters defending the besieged city of Basra fired on hundreds of civilians trying to flee.

Meanwhile, more troops are on their way now — the Pentagon said it plans to send another 130,000 troops into the region.

A prolonged war would bring with it a prolonged period of uncertainty, traders worry. That could leave everyone — investors, companies, consumers — continuing to sit on their hands, waiting to see how things pan out. All of which would bode poorly for the market, corporate earnings and the economy.

Meanwhile, there were signs that U.S. consumers may be growing cautious amid the turmoil in Iraq. U.S. consumer spending idled in February for the second month in a row, according to the Commerce Department.

Economists were expecting personal spending to decline 0.1 percent after an unchanged performance in January. The last time spending posted two consecutive months without any increase was back in December of 1990 and January 1991, when the United States was preparing for its first war in the Gulf.

The Commerce Department said personal income rose 0.3 percent after rising 0.4 percent in January. Economists were expecting personal income to rise 0.2 percent during the month.

And war worries sent consumers' attitudes about the economy down at the end of March, according to the University of Michigan's full-month report on consumer sentiment for March.

Market sources who saw the University of Michigan's full-month report on consumer sentiment for March said the overall sentiment index fell to 77.6 from 79.9 at the end of February. The sentiment index was, however, a bit stronger than the 75 reading seen in the middle of March. The Michigan report is released only to subscribers.

The University of Michigan's component measures were generally weaker as of the end of March. The index for consumer expectations was said to have fallen to 69.6 from 69.9 at the end of February. Like the sentiment gauge, the expectations gauge was a modest improvement from the 67.2 seen in the middle of the month.

Meanwhile, the final current conditions index for March was said to have shown a decrease to 90 from 95.4 in February. The current conditions index was 87.1 in the middle of March.

The University of Michigan report is based on a telephone survey. The month end survey follows the much more broadly based Conference Board consumer confidence survey, which also showed modest weakening for March.

Earlier this week, other signs of a wobbly recovery emerged. Sales of new single-family homes saw a sharp drop, and orders for durable goods declined.

Economists said that a worsening labor market also has made people more conservative. And a turbulent stock market, higher energy prices and uncertainties stemming from the war have made consumers nervous about their own financial prospects, experts said.

Meanwhile, U.S. Treasury prices rose. The 10-year bond gained 9/32 to 99 28/32. Its yield, which moves in the opposite direction of its price, fell to 3.89 percent from 3.92 percent late Thursday.

In Europe, stock prices ended slightly lower in London and Frankfurt but inched higher in Paris. The London International Stock Exchange's blue-chip FTSE-100 index eased 8.1 points to 3,721.0. The German DAX index lost 31.42 points to 2,552.63 and the French CAC-40 index added 3.07 points to 2,725.91.

Analysts said Frankfurt was dragged lower by a plunging Munich Re, while hotel and airline stocks suffered amid worries over the war on Iraq and the spread of a deadly respiratory disease.

Reinsurer Munich Re plunged to its lowest level in nearly a decade after brokers at Goldman Sachs cut their earnings-per-share forecast for the company and Morgan Stanley cut their fair-value assessment.

London was led lower by weakness in British Airways and hotel chain Hilton Group after Hilton Hotels cut its first-quarter and full-year earnings forecasts, citing wartime uncertainty.

Many Asian stock markets closed higher Friday, though prices slipped in Tokyo and Hong Kong, two of the region's major bourses.

Japan's Nikkei Stock Average, which rose 16.75 points in the previous session, fell 88.51 points, or 1 percent, to 8,280.16 as investors paid close attention to news about U.S. and British forces in Iraq, fearing a drawn out conflict could pose risks for the economy and prompt businesses and consumers to curb spending.

Meanwhile, in Hong Kong, the Hang Seng Index, which sank 174.77 points in the previous session, slipped 8.96 points to 8,863.36 as investors opted for the sidelines to see if the Hong Kong government measures to quarantine people who had contact with sufferers of severe acute respiratory syndrome, or SARS, would curb the spread of the mysterious flu-like disease.

SARS has killed at least 11 people in Hong Kong, and has sickened more than 1,400 worldwide. It has caused a total of 50 deaths — most of them in Asia.

Other Asian markets settled slightly higher despite concerns that the war in Iraq could last longer that was previously expected.

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