- The Washington Times - Saturday, January 25, 2003

NEW YORK (AP) Wall Street slid to its lowest levels in three months yesterday, as war anxieties and a brokerage downgrade of insurance giant American International Group sparked fears of a faltering economy in the coming months. The Dow Jones Industrial Average dropped 238 points.
Analysts say many investors wanted to dump shares ahead of Monday's key report by U.N. officials on arms inspections in Iraq and President Bush's State of the Union address Tuesday. Their comments are expected to signal whether war is imminent.
"It's war jitters," said Larry Wachtel, market analyst at Prudential Securities. "When you have all this nagging uncertainty, you have this abdication. People have backed away and said, 'Let's wait till next week.'"
The Dow fell 238.46, or 2.9 percent, to close at 8,131.01. It was the fourth triple-digit loss in five days, sending blue-chip stocks to their lowest levels since Oct. 16, when they closed at 8,036.03.
The broader market also finished sharply lower. The Standard & Poor's 500 index dropped 25.94, or 2.9 percent, to 861.40, also its lowest level since Oct. 16, when it closed at 860.02. The Nasdaq Composite Index fell 46.13, or 3.3 percent, to 1,342.14, the lowest finish since Dec. 31.
For the week, the three main indexes posted their second losing week, with the Dow falling 5.3 percent, the Nasdaq dropping 2.5 percent and the S&P; 500 losing 4.5 percent.
American International Group dropped $4.89 to $56.04 after Morgan Stanley cut the insurer's stock rating to "equal weight" from "overweight."
CMS Energy lost $2.47, or 28.9 percent, to $6.07 after the company suspended its dividend and said its 2002 net loss would be worse than expected.
Amgen declined $1.26 to $52.24 after the biotech company reported a quarterly profit that was in line with analysts' estimates.
Analysts say tepid corporate earnings outlooks issued in recent days have dampened investor optimism, leading to selling that has erased Wall Street's New Year's rally. Concerns about a war with Iraq also weigh heavily on the market.
"There's an obsessive-compulsive look at Iraq right now. Despite many in-line earnings news, all they see is reports on Saddam and an escalation of a potential conflict," said Philip S. Dow, managing director of equity strategy at Dain Rauscher Wessels.
Analysts said investors should not be overly concerned about yesterday's declines, citing the 1990-91 market reaction to the Gulf War, when stocks slid as war approached but rallied once the conflict began.
"Traditionally, with this kind of uncertainty over a conflict, the markets trade down until the bombs drop," Dow said. "There will be days it will look at some earnings news and trade up, but the market is going to stay in a volatile range."
In addition, while the Dow and S&P; 500 hit three-month lows, they are still well above their multiyear lows reached on Oct. 9, analysts said. On that date, blue-chip stocks closed at 7,286.27 and the S&P; dropped to 776.76.
Broadcom Corp. slid $2.50 to $15.11 after the communications chip maker's chief executive, Henry Nicholas, unexpectedly announced his resignation, citing family reasons. Chief operating officer Alan E. Ross was named as interim CEO.
Winners included Nortel Networks, which gained 18 cents to $2.58, after the telecommunications equipment maker posted a fourth-quarter loss that was narrower than analysts' expectations; it also expects to achieve profitability, excluding one-time charges, by the second quarter.


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