Quote:
War is bad for business.
Sorry but this is nonsense. War is the driver and motivator for massive areas of the economy. It's basic economics said by pretty much everyone from Keynes on.
Yup, let the good times roll.....
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Stocks Sink Amid War Fears
Monday, January 27, 2003
NEW YORK ? Stocks fell sharply Monday, with the blue-chip Dow tumbling below 8,000 for the first time since Oct. 15, as investors ignored upbeat data on brisk home sales, opting to sell amid growing uncertainty over Iraq.
The Dow closed down 141.45 points, or 1.7 percent, at 7,989.56, suffering its seventh loss in eight sessions, for a combined drop of 853 points. 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 broader market was also down. The Nasdaq composite index fell 16.86, or 1.3 percent, to 1,325.28. 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.
Sentiment was dented by a growing threat of war and fears of what a protracted conflict would do to a sluggish economy after chief United Nations arms inspector Hans Blix said Iraq "seems not to have genuinely accepted disarmament demands."
"Iraq is front and center," said Richard Cripps, chief market strategist for investment firm Legg Mason Wood Walker. "Worry is a quagmire. There's no resolution in sight and that uncertainty backs into business investment decisions, creating a vacuum that sellers are filling."
"It's the continued cycle of uncertainty," said Fahnestock & Co. strategist Alan Ackerman. "There's an increased level of uncertainty at a time when the market itself is brittle, with weak technical underpinnings."
Blix, whose team spent two months hunting for evidence of banned weapons of mass destruction in Iraq, said Iraq has cooperated in providing access in opening sites for inspection but had fallen short in filling in the gaps of last month's declaration of its weapons programs.
The U.N. report comes a day before President Bush's State of the Union speech in which he will try to rebuild international support for a potential strike on Iraq as well as answer growing doubts from the U.S. public.
"Until the president's speech is digested, the market is going to be dicey," Ackerman said.
The widely anticipated report from Blix did little to dispel the fear of war in world financial markets, as stocks around the globe and the dollar fell, while safe-haven gold spiked to its highest level in more than six years.
"It's just war, war, war fears. The fear index is running neck to neck with the price of gold," said Peter Cardillo, chief strategist at Global Partners Securities.
Stocks briefly rose on news that sales of existing U.S. homes surged 5.2 percent in December while home sales for 2002 set a record. European markets also briefly turned positive, with traders pinning the move on talk that Iraqi President Saddam Hussein was going into exile. But overseas markets slumped when there was no confirmation of the rumor.
The war factor continues "to overhang not only the domestic but the global markets and the market continues to ignore some good economic news," Cardillo said. "But we are in the final states of discounting before some military intervention takes place."
Dow stock Johnson & Johnson (JNJ) lost $1.43 to $52.18. The drug giant said it will record a fourth-quarter charge after an arbitrator ordered it to reimburse Amgen Inc. for attorneys' fees and costs incurred in a dispute over anemia drug licensing rights. Amgen lost $1.46 to $50.78 on Nasdaq.
The specter of war has haunted the market for months. Corporate profits have already been hit by the sluggish economy, and a conflict in the Middle East could delay capital spending and keep a lid on earnings growth. This week marks one of the busiest periods of the fourth-quarter earnings season, and many companies are not showing any profits improvement.
Freddie Mac (FRE), the No. 2 U.S. mortgage finance company, dropped $2.51, or 4.2 percent, to $56.60. The company said it would not provide a 2003 earnings forecast or an interest margin outlook amid a cloudy business environment.
Meat company Tyson Foods Inc. (TSN) sank $1.25 to $10.24. The company said earnings sank, hurt by high grain prices as well as low meat prices due to oversupply.
Communications chip maker Broadcom Corp. (BRCM) tumbled 95 cents to $14.16, or more than 6 percent. Last week the company's founder and chief executive resigned and it posted a quarterly loss of $1.76 billion after special charges.
Lear Corp.(LEA), the world's fifth-largest automotive parts supplier, rallied $2.18 to $39.87. The company posted a quarterly profit, boosted by higher vehicle production in North America, and said it expected company sales to rise in 2003.
Wall Street's so-called "fear gauge", a key barometer of stock market jitters, rose to its highest level since late October, 2002, but it has not hit the panic levels that usually signal a bear market bottom.
The Chicago Board Options Exchange volatility index (VIX) peaked at an intraday high of 40.89, before retracing to 39.77. This is a contrary indicator and moves opposite stocks, thus a sharp rise in the VIX may suggest the market is overly pessimistic and that stock prices could rise.
"We expect the volatility index to peak between 45 and 50 levels over the next couple of weeks, which may signal an intermediate term bottom in the stock market," said Price Headley, chief analyst with advisory firm BigTrends.com.
Declining stocks trounced advancers about 3 to 1 on the New York Stock Exchange and more than 2 to 1 on Nasdaq. More than 1.4 billion shares changed hands on the Big Board and Nasdaq, respectively.
The Russell 2000 index, which tracks smaller company stocks, fell 6.48, or 1.7 percent, to 368.58.
Overseas, Japan's Nikkei stock average finished Monday 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.
Reuters and the Associated Press contributed to this report.
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You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation. You cannot multiply wealth by dividing it. ~ Adrian Rogers
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