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Closing Market Report

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Iraq resolution
sinks stocks


By Hope Yen
Associated Press

NEW YORK >> A U.N. resolution against Iraq and a downbeat outlook from McDonald's renewed investor doubts about the strength of the economic recovery, sending stocks lower today to end the week mixed.

The Dow Jones industrials posted their fifth straight week of gains, while the Nasdaq composite and S&P 500 snapped their four-week winning streak.

Trading was choppy as investors digested a busy week of news, including the midterm elections. Many were still reacting negatively to the Federal Reserve's surprisingly large half-point cut in interest rates on Wednesday, analysts said.

"Investors are worried the economy isn't turning around like we had expected," said Matt Brown, head of equity management at Wilmington Trust.

Declining issues outnumbered advancers nearly 2 to 1 on the New York Stock Exchange. Volume was heavy.

The Dow Jones industrial average declined 49.11, or 0.6 percent, to close at 8,537.13. Earlier in the day, blue-chip stocks rose as much as 82 points.

The broader market also finished lower. The Nasdaq composite index fell 17.43, or 1.3 percent, to 1,359.28. The Standard & Poor's 500 index dropped 7.91, or 0.9 percent, to 894.74. The Russell 2000 index fell 4.16, or 1.1 percent, to 378.99.

For the week, the Dow rose 0.2 percent, the Nasdaq fell 0.1 percent, the S&P 500 dropped 0.7 percent and the Russell tumbled 1.1 percent.

The price of the Treasury's 10-year note was up 9/32 point today, while its yield fell to 3.86 percent from 3.87 percent yesterday. The price of two-year Treasury notes fell 1/32, while their yield rose to 1.85 percent from 1.84 percent yesterday.

The U.N. Security Council today unanimously approved a tough new Iraq resolution, aimed at forcing Saddam Hussein to disarm or face "serious consequences." President Bush immediately went to the White House Rose Garden to warn Saddam to comply at once.

"It's very hard to get any sustainable rally with that negative cloud out there," Brown said. "I think the volatility is here to stay. But the outlook for us is that stocks are still better than bonds over the next year."

Meanwhile, McDonald's said it won't meet its 2002 earnings target and will close 175 restaurants, citing increased competition in a tough economic environment. Its shares fell $1.52 to $17.79.

"The McDonald's warning is a cause of concern," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray. "It says this recovery is going to be slower and come in more fits and starts. Right now, the key ingredient is how to get business spending again."

Tenet Healthcare fell $13.05 to $14.90 after its chief operating officer and chief financial officer left the hospital chain amid an investigation by the federal government over its Medicare payments for costly procedures.

Disney dropped 58 cents to $17.68 after reporting a larger fourth-quarter profit that met analysts' expectations but said sales remained slow at its theme parks.

Overseas, Japan's Nikkei stock average finished 2.6 percent lower. In Europe, Germany's DAX index was down 2.4 percent, France's CAC-40 declined 1.7 percent, and Britain's FTSE 100 fell 1.1 percent.



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