- The Washington Times - Monday, February 24, 2003

NEW YORK, Feb. 24 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market plunged Monday as the threat of war with Iraq remained on investors' minds.

The blue-chip Dow Jones industrial average slumped 159.87 points, or 1.99 percent, to close at 7,858.24, having jumped 103.15 points Friday. The tech-heavy Nasdaq composite index tumbled 26.65 points, or 1.98 percent, to 1,322.37, after gaining 17.79 points in the previous session.

The broader New York Stock Exchange composite index fell 80.95 points to 4,706.22, the Standard & Poor's 500 index lost 15.59 points to 832.58, but the American Stock Exchange composite index nudged up 3.65 points to 829.24 while the Wilshire 5000 Index tumbled 140.93 points to 7,895.04.

Big Board volume reached an estimated 1.22 billion shares, while Nasdaq volume was at 1.23 billion shares.

While the threat of war with Iraq has sent stocks falling sharply for more than a month, it is trading volume, not prices, that has taken the biggest hit and that poses the biggest risk to the market, experts said.

Most investors aren't selling, they're not trading at all, and that has given Wall Street extremely low volume and in turn the big price swings that are becoming routine.

Analysts said stocks fell from the opening bell.

Larry Wachtel, senior vice president at Prudential Securities, said, "It's a contrarian's dream! The gloom is as high as an elephant's eye, and yet, we have been able to eke out two winning weeks by dint of some surprising Friday buoyancy."

Wachtel said, "Entering the final week of February, there is red on the screens. Last week saw some of the lightest volume of the year, and The Wall Street Journal headline says investment pros want no part of current risk.

"The countdown to war continues as diplomatic maneuvering in the United Nations plays out its string, while on the earnings front, a lot of the major retailers report this week," Wachtel added.

The countdown to a vote in the divided U.N. Security Council begins this week, when the United States and Britain introduce a resolution that would declare Iraq in violation of obligations to disarm, and would set the stage for war.

The Bush administration remains intent on bringing the diplomatic discussions to a quick end. Secretary of State Colin Powell over the weekend said the United States wants a vote on the new U.N. resolution soon after chief weapons inspector Hans Blix reports to the Security Council March 7, with language implicitly authorizing military action.

Experts said the next six days are critical for Iraqi President Saddam Hussein. U.N. weapons inspectors have said Iraq still is not fully cooperating. To demonstrate that Iraq is cooperating, Saddam must comply with Blix's order to begin destroying all Iraq's Al Samoud 2 missiles and the engines and components for them by Saturday.

On the corporate front, Ahold, the second-largest food services retailer in the world and owner of the Stop and Shop supermarket chain, disclosed accounting irregularities in its U.S. business and said its chief executive and financial officers were quitting.

Devon Energy said it will buy Ocean Energy for $5.3 billion in stock and assumption of debt and other obligations in a bid to become the biggest U.S.-based independent oil and natural gas producer.

And home improvement retailer Lowe's reported fiscal fourth-quarter earnings of 40 cents a share, 7 cents better than expected and up from 28 cents a year earlier thanks to its expansion to larger markets. The company also forecast first-quarter and fiscal year 2004 earnings per share that are stronger than what analysts are expecting.

Meanwhile, U.S. Treasury prices pushed higher. The 10-year bond rose 11/32 to 100 7/32. Its yield, which moves in the opposite direction of its price, slipped to 3.85 percent from 3.89 percent late Friday.

Analysts said Treasuries were lifted by the weakness in stocks, hopes for European rate cuts and signs a war with Iraq may be only a matter of weeks away.

In Europe, stock prices ended lower in light trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index fell 25.30 points, or 0.68 percent, to 3,701.80, the German DAX index fell 77.52 points, or 2.93 percent, to 2,571.35, while the French CAC-40 index fell 44.22 points, or 1.6 percent, to 2,785.61.

European stocks came under pressure as the early decline on Wall Street kept most investors sidelined.

Meanwhile, the food retailing sector came under pressure after Dutch group Ahold issued a profit warning, citing possible accounting irregularities at its American operations.

In Asia, prices on the Tokyo Stock Exchange snapped their four-day losing streak, supported by bargain hunting and Friday's gains on Wall Street. The blue-chip Nikkei Stock Average, which lost 137.38 points during the previous session, rose 51.41 points, or 0.6 percent, to 8,564.95.

Analysts said the market snapped its four-day losing streak on a combination of bargain-hunting and Friday's gains on Wall Street.

Reports that Toshihiko Fukui, a policy conservative, would be the next Bank of Japan governor were confirmed just as the market closed, but analysts noted the announcement was too late for the market to react.

Elsewhere, stocks ended slightly lower on the Hong Kong Stock Exchange as early gains were lost as investors became nervous about corporate earnings due in the next few weeks. The blue-chip Hang Seng Index, which lost 139.62 points in the previous session, slipped an additional 11.39 points, or 0.1 percent, to 9,239.47.

Prices ended higher on the Taiwan Stock Exchange after four straight sessions of losses. The key Weighted Price Index of the Taiwan Stock Exchange, which eased 2.35 points in the previous session, rose 60.85 points, or 1.3 percent, to 4,609.20.

Prices also ended higher on the South Korean Stock Exchange. The Korea Composite Stock Price Index, or Kospi, which eased 1.91 points during the previous session, gained 12.69 points, or 2.1 percent, to 616.29, lifted by reports that North Korea may reconsider its withdrawal from the nuclear nonproliferation treaty.

Prices ended lower on the Singapore Stock Exchange. The Straits Times Index, which added 2.62 points during the previous session, slipped 8.24 points, or 0.6 percent, to 1,306.79, pressured by continued uncertainty over a possible war in Iraq.

Elsewhere, prices ended higher in moderate trading on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which slipped 2.10 points during the previous session, rose 32.90 points, or 1.2 percent, to 2,837.30.


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