Closing Market Report

Star-Bulletin news services

Stocks post advance
despite war worries

By Amy Baldwin
Associated Press

NEW YORK >> With a wary eye toward impending war with Iraq, Wall Street turned cautious today before ending with its fifth straight advance.

"What we are having is a tug of war between people who are latching onto the certainty of what to expect over the next few days ... and by the somewhat more negative people who would say while the outcome is more certain, it is not something to look forward to," said Jack Caffrey, an equities strategist at J.P. Morgan Private Bank.

President Bush gave Iraqi leader Saddam Hussein until tomorrow to go into exile or face a massive U.S. military strike. Bush also warned the nation about retaliatory terror attacks and announced that the terror alert was being raised to orange, the second-highest level.

Today, Iraq's leadership rejected the ultimatum.

Stocks have been rallying since last week on investors' hopes that a short-lived war will spur a rebound in business and consumer spending. Analysts have said, however, that stocks will have a difficult time holding onto rallies as long as there is uncertainty about war.

After falling as much as 45.80, the Dow Jones industrial average closed up 52.31, or 0.6 percent, at 8,194.23. In the previous four sessions, the Dow rose by a stunning 617.86 points.

The broader market also ended higher. The Nasdaq composite index rose 8.26, or 0.6 percent, to 1,400.53. The Standard & Poor's 500 index advanced 3.66, or 0.4 percent, to 866.45. The Russell 2000 gained 2.60 to 368.00.

On the New York Stock Exchange, 1,777 advanced, 1,502 declined and 190 were unchanged. Volume came to more than 1.5 billion shares.

The price of the 10-year Treasury note fell 17/32, while its yield rose to 3.90. The 20-year note fell 1 1/16; its yield gained 7 basis points to 4.87. The 2-year note slipped 3/32 to 99 20/32, with its yield rising 6 basis points to 1.69.

Trading was choppy throughout the session with stocks fluctuating ahead of the Federal Reserve's decision on interest rates. Stocks managed to post a decent advance just before the Fed announced it was leaving rates unchanged and kept its bias toward rates at "neutral." But stocks pulled back after that decision as investors were disappointed that the central bank hadn't cut rates by another 0.25 percentage point or at least moved its bias toward easing them further in the future. The Fed has lowered rates 12 times since early 2001 in an effort to reinvigorate the economy.

Today's data on the economy was also downbeat as the Commerce Department reported that new housing construction plunged by 11 percent in February, the sharpest decline in nearly a decade. Home builders subsequently traded lower. Centex fell 56 cents to $52.04 and Lennar declined 27 cents to $51.78.

Among today's winners, Applied Materials advanced 41 cents to $13.54 after the chip equipment maker announced a restructuring plan that including cutting its work force by 14 percent, or 2,000 employees.

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