- The Washington Times - Tuesday, November 12, 2002

NEW YORK (AP) Escalating concerns about a war with Iraq dominated Wall Street yesterday, sending stocks sliding in light Veterans Day trading.
Analysts said the declines weren't surprising given the market's strong October rally; with the better-than-expected earnings season past, there is still profit taking under way. Investors also are shying away from commitments to stocks as they focus on the possibility of U.S. troops fighting with Iraq.
"If you look at investor sentiment, we've switched to more complacency. Also you now have Iraq taking center stage," said Steven Goldman, chief market strategist at Weeden & Co. "That uncertainty is causing hesitation for investors."
"I think we'll have a very choppy environment in the near term," he said.
The Dow Jones Industrial Average fell 178.18, or 2.1 percent, to close at 8,358.95. The drop gave the blue chips their first three-day decline in five weeks, with a loss of 412 points.
The broader market also finished lower. The Nasdaq composite index dropped 40.09, or 3 percent, to 1,319.19. The Standard & Poor's 500 index declined 18.55, or 2.1 percent, to 876.19.
Senior administration officials said President Bush has approved tentative Pentagon plans involving up to 250,000 troops invading Iraq should a new U.N. arms inspection effort fail.
That comes after the U.N. Security Council passed a resolution Friday demanding that Saddam Hussein eliminate weapons of mass destruction and open up to inspectors. Iraq has until Friday to accept the U.N. terms.
"Ideally, I think people would like to see Saddam and his Cabinet say, 'Come on in,'" said Charles White, portfolio manager at Avatar Associates. "Realistically, investors are wanting to see, if Iraq refuses, a quick and decisive action, one in which there is a coalition of countries that endorse the action and not the U.S. and Britain acting bilaterally to do this.
"The market should not, absent any real material change in the [economic] fundamentals, make much headway in one direction or another," Mr. White added. "But we're one geopolitical headline away from seeing the market up for sale again."
Meanwhile, there was no economic news and few corporate developments yesterday to distract traders. The light holiday trading also tended to exacerbate price swings.
Investors have been more upbeat following five straight weeks of Dow gains on better-than-expected earnings news. But analysts say the market remains vulnerable to profit taking.
In addition, some investors are nervous that the Federal Reserve's larger-than-expected half-point cut in interest rates signaled an unusually fragile economy, leading to sell-offs last week that snapped the Nasdaq and S&P; 500's four-week winning streaks.
Decliners included Hewlett-Packard, which dropped $1.83 to $14.85, after its president, Michael Capellas, quit the computer company. The move followed a Wall Street Journal report that he was a front-runner to become bankrupt WorldCom's new chief executive.
Oracle fell 50 cents to $9.05 after Deutsche Bank downgraded the technology company's stock from buy to hold.
Dianon Systems rose $6.45 to $46.64 after Laboratory Corp. said it would acquire the diagnostic service provider for about $598 million in cash. Laboratory fell $1.20 to $22.75.
OfficeMax rose 31 cents to $5.60 after the office-products retailer reported third-quarter profits beat Wall Street's estimates by a penny.
Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Volume was light at 1.38 billion shares, far below the 1.8 billion traded Friday.

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