- The Washington Times - Thursday, February 27, 2003

NEW YORK (AP) Investors held to their pattern of retreating after even a moderate advance, sending stocks sharply lower yesterday amid ongoing concerns about Iraq. Hewlett-Packard's report of weaker-than-expected revenue also contributed to the decline, which more than wiped out the previous session's gain.
The downturn wasn't surprising as sell-offs have been the norm for weeks. Analysts say stocks can't be expected to move upward until it is clear whether there will be a war with Iraq and what impact it will have on the U.S. economy.
"The conflict in the Middle East is on the forefront of everyone's mind," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston. "We are just sort of battening down the hatches and trying to figure out what is going to go on in the Middle East. The hope in the back of everyone's minds is there is a quick resolution and that businesses and consumers start spending again and give investors some faith in the market."
The Dow Jones Industrial Average closed down 102.52, or 1.3 percent, at 7,806.98, easily erasing Tuesday's gain of 51.26. It was the Dow's second triple-digit loss in three days, after Monday's decline of 159.87.
The broader market also retreated. The Nasdaq Composite Index fell 25.30, or 1.9 percent, to 1,303.68. The Standard & Poor's 500 index declined 11.02, or 1.3 percent, to 827.55.
Selling has dominated Wall Street in 2003, with the only exception being a short-lived New Year's rally. Many analysts don't expect investors' moods to improve until the Iraq situation is resolved.
"I have rarely seen this much pessimism not turn into a rally. But it is just hard to be positive," said Mike Weiner, managing director of equities at Banc One Investment Advisors in Columbus, Ohio.
Analysts said investors still were smarting from a bigger-than-expected drop in consumer confidence reported Tuesday by the Conference Board. Consumer confidence in February fell to its lowest level since October 1993. The Dow fell as much as 138 points Tuesday after the report, but managed to pull together a late-day rally because of bargain hunting.
Yesterday, Federal Reserve Chairman Alan Greenspan said during testimony before the Senate Banking, Housing and Urban Affairs Committee that the plunge in confidence was "a very significant decline," but not a surprise.
Disappointing earnings reports contributed to yesterday's slippage. Hewlett-Packard was the Dow's biggest loser, dropping $2.81 to $15.37, having reported quarterly earnings late Tuesday that met analysts' expectations but revenue that missed forecasts.
Eaton Vance declined 87 cents to $25.23 after the mutual fund and investment management company reported fiscal first-quarter earnings that were 3 cents short of analysts' expectations.
Among other losers, Morgan Stanley fell 75 cents to $35.42 after the Wall Street Journal reported the brokerage could face charges in an initial public offering investigation.
Gainers included Urban Outfitters, which rose $1.60 to $18.60 after Fulcrum upgraded the retailer to "buy" from "neutral."
Declining issues outnumbered advancers 9 to 5 on the New York Stock Exchange. Trading was light at 1.33 billion shares, below 1.49 billion on Tuesday.
The Russell 2000 index, the barometer of smaller-company stocks, fell 3.23, or 0.9 percent, to 357.97.

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