- The Washington Times - Thursday, January 30, 2003

NEW YORK, Jan. 30 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market tumbled Thursday as investors digested a barrage of fresh economic reports but remained focused on Iraq. High-tech shares posted some of the day's biggest losses.

The blue-chip Dow Jones industrial average tumbled 165.10 points, or 2.04 percent, to 7,945.61. The tech-heavy Nasdaq composite index plunged 35.95 points, or 2.65 percent, to 1,322.11.

The broader New York Stock Exchange composite index dropped 81.52 points to 4,784.44, while the Standard & Poor's 500 index dropped 19.79 points to 844.57, and the American Stock Exchange composite index dipped 0.95 point to 809.08. The Wilshire 5000 Index fell 173.27 points to 8,020.90.

Big Board volume reached an estimated 1.50 billion shares, while Nasdaq volume was at 1.43 billion shares.

Following AOL Time Warner's announcement Wednesday that it posted a $45 billion loss in the fourth quarter, Internet shares were severely hurt. Meanwhile, chipmakers and computer manufacturers including Hewlett-Packard, Intel, and Microsoft posted some of the day's biggest losses on profit taking.

Looking at the broader picture, said Bryan Piskorowski, first vice president at Prudential Securities, the markets are still digesting actions on the political and monetary policy front as investors also digested more earnings and economic reports.

"Having enjoyed a couple of late-day, short-covering rallies, stocks are sitting atop a little winning streak, though the tone clearly remains cautious and sober. Continued saber-rattling and a war's potential impact on the economy are a prohibitive factor, clouding corporate forecasts," Piskorowski said.

On the economic front, before the opening bell, the Commerce Department gave the markets its first glimpse at the first estimate of economic growth in fourth quarter, which showed a marked slowdown from third quarter.

The government agency said the gross domestic product, or the total value of all goods and services produced in the economy, advanced 0.7 percent in the final quarter of 2002 after posting a much stronger 4-percent growth in third quarter.

The fourth-quarter growth was the slowest pace since the third quarter of 2001. Economists on Wall Street were expecting GDP to expand at a 0.09-percent clip in the final quarter of 2002.

For all of 2002 GDP expanded 2.4 percent, after growing 0.3 percent in 2001 and at a 3.8-percent annual rate in all of 2000. The GDP is the broadest measure of aggregate economic activity and encompasses every sector of the economy.

The Labor Department said new claims for state unemployment benefits rose by 14,000 to a seasonally adjusted annual rate of 397,000 during the latest reporting week, but remained below the key 400,000 level for the four-week period, suggesting the weakness in the job market may be abating. Economists were expecting first time claims to rise by 4,000 during the week.

The Labor Department also said the Employment Cost Index, its key gauge of wage and benefit costs, posted its smallest increase during the final quarter of 2002 in three years. The ECI rose 0.7 percent in the final quarter of 2002 — its smallest increase since a 0.4 percent rise during the first quarter of 1999.

For all of 2002 the government said the index rose 3.4 percent — its smallest gain since 1999.

Economists were expecting ECI to rise at a 0.9-percent rate in the fourth quarter after rising at a 0.8-percent clip during the third quarter and jumping 1 percent during the second quarter of last year.

The employment cost index is a measure of total employee compensation costs, including wages and salaries as well as benefits. The employment cost index is the broadest measure of labor costs. Investors watch the report because the employment cost index is an easy way to evaluate wage trends and the risk of wage inflation.

And, the Conference Board said its measure of help-wanted advertising, a key barometer of America's job market, slipped in December amid few signs of any developing momentum in the labor market.

"On the world's stage, several European nations are backing Bush's policy for Iraq. In The Wall Street Journal's op-ed section, Britain, Poland, Spain, Italy, Hungary, Denmark, Portugal, and the Czech Republic said they will support the campaign to disarm Saddam Hussein, isolating Germany and France," Piskorowski said.

Analysts noted for the investor the case of the geopolitical jitters was not so bad.

On the corporate front, Dow components, Boeing and Exxon Mobil reported fourth-quarter results: Boeing, the aerospace manufacturer, posted a profit of 71 cents a share, in line with analyst estimates and down 90 cents from the year-ago period. But the company guided expectations lower on both 2003 earnings as revenues. Exxon, the world's biggest oil company, posted earnings of 56 cents a share, above analysts' estimates of 50 cents and up from 42 cents in the year ago period.

Meanwhile, U.S. Treasury prices rose. The 10-year bond rose 13/32 to 100 7/32. Its yield, which moves in the opposite direction of its price, fell to 3.97 percent from 4.02 percent.

In Europe, stock prices ended higher in London and in Paris but eased in Frankfurt. The London International Stock Exchange's blue-chip FTSE-100 index rose 94.90 points, or 2.72 percent, to 3,578.70. The German DAX index eased 12.79 points to 2,693.78 and the French CAC-40 index rose 74.08 points, or 2.6 percent, to 2,914.13.

Analysts said British and French stocks rose in a broad-based rally as investors brushed aside the early weakness on Wall Street and snapped up bargains in technology stocks.

Prices on the Tokyo Stock Exchange ended lower for a fifth-consecutive session, settling just above a two decade low, pressured by concerns over the threat of war in Iraq. The blue-chip Nikkei Stock Average, which fell 194.31 points Wednesday, slipped 14.27 points, or 0.17 percent, to 8,316.81 — just above its 20-year closing low of 8,303.39 set back on March 25, 1983.

The market opened higher on a rally in technology issues, following Sony's announcement after the market closed Wednesday that profit nearly doubled in the October-December quarter on year. But the rally soon ran out of steam as investors began selling later in the session.

Analysts said blue-chip stocks came under selling pressure from institutional selling amid growing worries over a U.S.-led war with Iraq and as domestic earnings weighed on market sentiment.

Prices ended slightly higher in light post holiday trading on the Hong Kong Stock Exchange. The blue-chip Hang Seng Index, which lost 84.81 points during the previous session, rose 18.16 points, or 0.2 percent to 9,258.95.

Analysts said stocks edged higher as oil companies and mainland firms posted gains in quiet dealings ahead of the Chinese New Year that will have the market closed from Friday through Monday.

Prices ended higher on the South Korean Stock Exchange in a technical rebound after falling to a 15-month low in the previous session. The Korean Composite Stock Price Index, or Kospi, which lost 17.21 points during the previous session, rose 8.51 points, or 1.5 percent, to 591.86. South Korea's stock market will be closed on Friday for the Lunar New Year holiday.

Meanwhile, prices ended at a new month low on the Singapore Stock Exchange. The key Straits Times Index, which dropped 36.84 points during the previous session, lost another 6.96 points, to 1,295.89.

Analysts said stocks fell on nagging concerns about an imminent war in the Middle East and a possible standoff closer to home with neighboring Malaysia over water supplies and a disputed island.

Prices ended slightly higher on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which dropped 10.60 points during the previous session, rose 13.10 points, or 0.5 percent, to 2,943.00, supported by gains in banks and media stocks.

Meanwhile, the Taiwan Stock Exchange remained closed Thursday for the long Chinese New Year holidays. The market will remain closed until Feb. 6 after the Weighted Index rose 42.57 points to 5,015.16 during Tuesday's session.

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