- The Washington Times - Saturday, February 15, 2003

NEW YORK (AP) The specter of war with Iraq, after intimidating investors for weeks, sparked a rally on Wall Street yesterday as the likelihood of conflict appeared to increase.
Stocks rose for the first time in four sessions and claimed their first winning week in five weeks. The Dow Jones Industrial Average soared more than 150 points, its biggest one-day gain in a month.
Analysts said a long-awaited report by United Nations weapons inspectors gave investors a sense of resolution after weeks of speculation that unsettled the markets. U.N. inspectors said that, while they had uncovered no weapons of mass destruction in Iraq, several banned materials remain unaccounted for, which many believed increased the chances of a military conflict.
While investors appear worried about a war, they seem to fear uncertainty more.
"What I am hearing is: 'We are going to war in two to three weeks. The last time we went to war, we rallied. So, let's rally now,'" said Larry Wachtel, market analyst at Prudential Securities.
The Dow closed up 158.93, or 2.1 percent, at 7,908.80. The blue chips recouped a large chunk of the 170.24 points lost in the previous three sessions. Yesterday's win was the Dow's largest one-day victory since Jan. 9 when it rose 180.87.
The market's broader indicators also jumped sharply higher. The Nasdaq Composite Index rose 32.73, or 2.6 percent, to 1,310.17. The Standard & Poor's 500 Index climbed 17.52, or 2.1 percent, to 834.89.
Yesterday's buying spree enabled the indexes to post their first winning week in five weeks. For the week, the Dow and S&P; 500 each rose 0.6 percent, while the Nasdaq gained 2.2 percent.
Many on Wall Street believe the market will rally after military action is undertaken in Iraq, as was the case with the Persian Gulf war. However, until there is more clarity on the situation, analysts are dubious that any gains would be long-lived. Yesterday's advance was only the second in nine sessions as fears of terrorism and war have escalated.
The U.N. Security Council received another report yesterday in which inspectors said they found no weapons of mass destruction in Iraq, but that many banned materials remain unaccounted for.
Earlier in Baghdad, in an apparent attempt to avert an attack, Saddam Hussein signed a decree banning the use of weapons of mass destruction.
Concerns about war have been the biggest drag on the market so far this year, stripping the Dow of about 900 points since Jan. 14, when the blue chips stood at 8,842.62, their high for 2003.
So far this year, the Dow has dropped 5.2 percent, the Nasdaq has lost 1.9 percent and the S&P; has declined 5.1 percent.
Yesterday's economic news was mostly upbeat. Industrial production surged in January, rising by 0.7 percent while businesses had boosted inventories in the previous month two signs of promise for a flagging economy.
The 0.7 percent increase in industrial activity, reported by the Federal Reserve, was a turnaround from the 0.4 percent drop in December and better than the 0.3 percent economists were predicting.
Meanwhile, the Commerce Department reported that U.S. companies boosted inventories by 0.6 percent in December, the largest amount in three months as retail sales during the holidays fell short of expectations.
The 0.6 percent increase in inventories was stronger than the 0.2 percent rise economists were predicting and represented the biggest boost since September.
But the University of Michigan's preliminary report on consumer sentiment for February was disappointing. The report showed a decrease in sentiment to 79.2 from 82.4 in January. Economists were expecting a reading of 82.0.

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