- The Washington Times - Tuesday, December 10, 2002

NEW YORK (AP) UAL's bankruptcy filing and a brokerage downgrade of IBM put investors in a black mood yesterday, sending stocks sharply lower and the Dow Jones industrials down more than 170 points.
Analysts said many investors were tempted to sell after the market's recent two-month rally, while others were nervous about the United Nations' search for weapons of mass destruction in Iraq.
"The market is still in a malaise," said Charles Pradilla, chief investment strategist at SG Cowen Securities. "You inject the recent news into a market still in the process of taking profits, and you get this real choppy action."
The Dow slid 172.36, or 2 percent, to close at 8,473.41, having fallen 2.8 percent last week to snap an eight-week winning streak. Blue-chip stocks have now declined in the last six of seven sessions to a level not seen since Nov. 13.
The broader market also fell. The Nasdaq Composite Index declined 55.30, or 3.9 percent, to 1,367.14, also the lowest since Nov. 13. The Standard & Poor's 500 dropped 20.23, or 2.2 percent, to 892.
United Airlines filed for federal bankruptcy court protection yesterday, one of the 10 largest Chapter 11 filings in U.S. history, underscoring the troubles in the airline industry.
Dow industrial IBM, meanwhile, fell $2.73 to $79.59 after Banc of America cut the computer maker's brokerage rating to "market performer" from "buy."
Analysts say investors are still largely upbeat despite recent declines and should bid stocks higher by year's end. After eight weeks of Dow advances, it's expected that some investors would cash in some profits, they said.
"December is usually one of the market's strongest months, but it's usually the last week and a half that we see the gains," said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn.
"I think after we finish this consolidation, stocks should be set up for some type of year-end rally," he said.
Investors also were hopeful that Treasury Secretary Paul H. O'Neill's resignation will bring a new approach from the government to bolstering the economy, although reaction to President Bush's nomination of CSX Chairman John W. Snow as Mr. O'Neill's replacement was muted.
Mr. Pradilla called Mr. Snow "market friendly," but said investors weren't particularly impressed because his corporate credentials were similar to Mr. O'Neill's.
"There's nothing unique to him to move the market either way," he said.
Analysts also say the market remains vulnerable to losses on investor concerns about a war with Iraq and the strength of corporate earnings.
International inspectors began reviewing Saddam Hussein's 12,000-page arms declaration yesterday for clues about whether Iraq is free of weapons of mass destruction. The United States said "there's skepticism and there's fear" as it combed the documents.
Wal-Mart fell $1.19 to $51.85 after the discounter said December sales were expected to fall at the lower end of estimates.
Citigroup dropped $1.41 to $36.15 and J.P. Morgan Chase fell $1.17 to $23.26 on reports that congressional investigators were examining whether the two financial companies helped Enron hide debt or avoid taxes.
Declining issues outnumbered advancers nearly 3 to 1 on the New York Stock Exchange.
Volume was light at 1.23 billion, compared with 1.25 billion traded Friday.
The Russell 2000 index, a barometer of smaller-company stocks, fell 10.43, or 2.6 percent, to 386.29.
Overseas, Japan's Nikkei stock average finished 0.4 percent lower yesterday. In Europe, France's CAC-40 fell 2.2 percent, while Britain's FTSE 100 dropped 2 percent and Germany's DAX slid 4.4 percent.

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