- The Washington Times - Thursday, March 27, 2003

NEW YORK (AP) Wall Street fluctuated and closed modestly lower yesterday as investors reacted to disquieting developments in the war in Iraq. Traders also collected profits from the advance on Tuesday and the big rally last week.
Stocks tumbled on reports that Iraq appeared prepared to use chemical weapons and on a warning from President Bush that the conflict is far from over.
Still, the market's weakness wasn't surprising given the stunning rise stocks made just before and soon after war began last week. Analysts say that stocks will continue to run into resistance as long as the outcome in Iraq is uncertain, and that investors' biggest concern is that the conflict will drag on longer than they had anticipated.
"We are getting to the reality of what war is," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati.
The Dow Jones Industrial Average closed down 50.35, or 0.6 percent, at 8,229.88. The Dow traded lower for most of the session, falling as much as 92.50, although it briefly turned positive in late afternoon, eking out a gain of 4.76.
Trading has been erratic since the war began last Wednesday. On Tuesday, the Dow gained 65 points, although the slippage yesterday wiped out much of that advance. Stocks dropped 307 points on Monday in a pullback that was expected after a 997-point gain during the previous eight sessions.
The broader market also fell yesterday. The Standard & Poor's 500 index declined 4.79, or 0.6 percent, to 869.95. The Nasdaq Composite Index fell 3.56, or 0.3 percent, to 1,387.45.
Trading also was light, as it was for weeks leading up to military action in Iraq, indicating that many investors simply aren't participating on Wall Street.
Stocks have mostly fallen back this week amid concerns that the war will take longer than anticipated, posing a threat to the shaky economic recovery. The rally last week was based on optimism about a short war.
Mr. Bush added to investors' worries yesterday, saying the conflict is far from over and warning that U.S.-led forces will face "the most desperate elements of a doomed regime" as they close in on the Iraqi capital.
Investors also were unnerved when Brig. Gen. Vincent Brooks told reporters that 3,000 chemical suits had been found in a hospital in central Iraq, heightening fears that Saddam Hussein's regime was ready to use chemical weapons.
The economic news yesterday provided no comfort for investors, showing that business remains weak. The Commerce Department reported that orders to U.S. factories for big-ticket goods fell 1.2 percent in February, the biggest decline in three months.

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