- The Washington Times - Monday, December 15, 2003

NEW YORK (AP) — Wall Street sank lower yesterday as disappointing sales at Wal-Mart Stores Inc. chilled the retailing sector and eroded early gains following the weekend capture of fallen Iraqi leader Saddam Hussein.

Stocks traded briskly around the globe on news that Saddam was in custody, but the rally was short-lived on Wall Street. The major indexes shot up initially, but steadily retreated as investors refocused on the domestic picture. While the arrest was important news for U.S. forces in Iraq, analysts were not surprised by its limited effect on the markets.

“This is a geopolitical event that gave us a nice, short-term blip, but it wasn’t the kind of news that would drive us to even loftier levels,” said Brian Williamson, an equity trader at the Boston Company Asset Management. “The war is by no means over; this is just one piece of the puzzle, and not a cause for a huge end-of-war celebration.”

After soaring nearly 100 points in the first minutes of trading, the Dow Jones Industrial Average wheezed to a negative finish, ending the day down 19.34, or 0.2 percent, at 10,022.82.

The broader gauges were also lower. The Nasdaq Composite Index closed down 30.74, or 1.6 percent, at 1,918.26, after surging nearly 1 percent earlier in the day. The Standard & Poor’s 500 index lost 6.10, or 0.6 percent, to close at 1,068.04.

Overseas markets saw gains. Japan’s Nikkei stock average finished 3.2 percent higher following news of the arrest. The reaction was more muted in Europe, where major indexes lost ground but still ended the day higher. France’s CAC-40 closed up 0.6 percent, Britain’s FTSE 100 rose 0.01 percent, and Germany’s DAX index ended the day 0.4 percent higher.

The U.S. dollar also saw a midsession reversal, rising early in the day before plunging to a new low against the euro. Gold rose in Europe, but later declined in New York.

Saddam’s arrest could signal a turning point in Iraq, where U.S.-led forces have faced scattered resistance since troops entered Baghdad on April 9. But there were worrisome signs yesterday that the insurgents would continue their campaign, as a suicide bomber drove a taxi into a police station on the northern outskirts of Baghdad, killing eight Iraqi policemen.

Analysts said Saddam’s capture may reduce resistance to U.S.-led troops in Iraq, which could lead to fewer disruptions in the nation’s oil fields. The capture also could help ease lingering concerns about the economic recovery and persuade investors to take on more risk.

Strong economic data and solid corporate outlooks have already given stock prices a boost, but some analysts have questioned whether the valuations are justified. Interest rates also remain a top concern for investors, and many were watching for the Labor Department’s report on consumer prices, due today. The index is the government’s most closely watched inflation barometer.

Few analysts were warmed by the news from retailing titan Wal-Mart, which lost $1.76 to close at $50.74. The world’s largest retailing chain said December growth at stores open at least a year was near the low end of its 3 percent to 5 percent projected range, and traffic was down for the week.


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