NEW YORK >> Escalating concerns about a war with Iraq dominated Wall Street today, sending stocks sliding in light Veterans Day trading. Stocks fall on war fears
By Hope Yen
Associated PressAnalysts said the declines weren't surprising given the market's strong October rally; with the better-than-expected earnings season past, there is still profit taking under way. Investors also are shying away from commitments to stocks as they focus on the possibility of U.S. troops fighting with Iraq.
"If you look at investor sentiment, we've switched to more complacency. Also you now have Iraq taking center stage," said Steven Goldman, chief market strategist at Weeden & Co. "That uncertainty is causing hesitation for investors."
"I think we'll have a very choppy environment in the near term," he said.
Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange. Volume was light.
The Dow Jones industrial average fell 178.18, or 2.1 percent, to close at 8,358.95. The drop gave the blue chips' their first three-day decline in five weeks, with a loss of 412 points.
The broader market also finished lower. The Nasdaq composite index dropped 40.07, or 3 percent, to 1,319.21. The Standard & Poor's 500 index declined 18.55, or 2.1 percent, to 876.19. The Russell 2000 index fell 9.86, or 2.6 percent, to 369.14.
Senior administration officials said President Bush has approved tentative Pentagon plans involving up to 250,000 troops invading Iraq should a new U.N. arms inspection effort fail.
That comes after the U.N. Security Council passed a resolution Friday demanding Saddam Hussein eliminate weapons of mass destruction and open up to inspectors. Iraq has until Friday to accept the U.N. terms.
"Ideally, I think people would like to see Saddam and his cabinet say, 'Come on in,' " said Charles White, portfolio manager at Avatar Associates. "Realistically, investors are wanting to see, if Iraq refuses, a quick and decisive action, one in which there is a coalition of countries that endorse the action and not the U.S. and Britain acting bilaterally to do this."
"The market should not, absent any real material change in the (economic) fundamentals, make much headway in one direction or another," White added. "But we're one geopolitical headline away from seeing the market up for sale again."
Meanwhile, there was no economic news and few corporate developments today to distract traders. The light holiday trading also tended to exacerbate price swings.
Decliners included Hewlett-Packard, which dropped $1.83 to $14.85 after its president, Michael Capellas, quit. The move comes after The Wall Street Journal reported he was a frontrunner to become bankrupt WorldCom's new chief executive.
Oracle fell 50 cents to $9.05 after Deutsche Bank downgraded the technology company's stock from buy to hold.
OfficeMax gained 31 cents to $5.60 after the office-products retailer reported third-quarter profits that beat Wall Street's estimates by a penny.
Overseas, Japan's Nikkei stock average finished 2.7 percent lower. In Europe, Germany's DAX index was down 1.2 percent, France's CAC-40 declined 0.2 percent, and Britain's FTSE 100 fell 0.5 percent.