Closing Market Report

Star-Bulletin news services

Dow hits three-month low

By Amy Baldwin
Associated Press

NEW YORK >> War fears pummeled Wall Street today, pushing the Dow Jones industrials below the 8,000 level for the first time in three months and sending the overall market lower for the seventh time in eight sessions.

Investors unloaded shares as U.N. weapons inspectors reported that Iraq failed to cooperate in helping their searches for arms and said inspections need more time. Investors were also cautious ahead of President Bush's State of the Union address tomorrow.

Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange, where trading volume was light.

The Dow closed down 141.45, or 1.7 percent, at 7,989.56. The blue chips last traded below 8,000 on Oct. 15 and last closed below that level Oct. 14, when they stood at 7,877.40.

The Dow suffered its fifth triple-digit decline in six sessions and its seventh loss in eight sessions. In eight sessions, the Dow dropped 853 points.

The broader market also pulled back sharply. The Nasdaq composite index fell 16.87, or 1.3 percent, to 1,325.27. The Standard & Poor's 500 index fell 13.92, or 1.6 percent, to 847.48, having fallen on Friday, as the Dow did, to levels last seen in October. The Russell 2000 index fell 6.48, or 1.7 percent, to 368.58.

The price of the Treasury's 10-year note was down 7/32 point, while its yield rose to 3.96 percent from 3.93 percent late Friday. The price of two-year Treasury notes was unchanged, but their yield rose to 1.65 percent, up from 1.64 percent Friday.

"The public at large is shunning equities. This is traditionally the time when money comes into equities, into retirement accounts. So, this is disturbing," said Stephen Massocca, president of Pacific Growth Equities. "People are concerned about Iraq, but I think there is a deeper concern about the state of the economy, the state of the markets. There is a kind of bear market malaise."

Investors are worried that war with Iraq would come as a particularly hard blow to an already feeble economy. One concern is that higher oil prices would result and would eat away at corporate profits. Another worry is that consumers would curtail their spending, which accounts for two-thirds of the economy.

"The confrontation (with Iraq), even though anticipated, is still an expensive matter and one with an uncertain outcome. So, the markets are on edge," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.

Among today's losers, mortgage banker Freddie Mac fell $2.51 to $56.60 on fourth-quarter earnings that missed analysts' expectations by 15 cents a share.

Tyson Foods dropped $1.25 to $10.24 after reporting fiscal first-quarter profits that were a penny shy of Wall Street's forecast.

But FedEx rose 85 cents to $51.65 after Morgan Stanley raised its recommendation on the stock to "equal-weight" from "underweight."

Japan's Nikkei stock average finished down 1.4 percent. In Europe, France's CAC-40 slid 3.6 percent, Britain's FTSE 100 dropped 3.4 percent and Germany's DAX index lost 2.7 percent.

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