News Column

Wall Street Struggles Higher as Prospects Seem to Brighten on War Front

March 26, 2003

NEW YORK - U.S. shares ended higher Tuesday in a choppy session, rebounding from Monday's selloff, as prospects appeared to brighten for the U.S.-led military action to topple Iraqi leader Saddam Hussein.

The Dow Jones industrials gained 65.55 points (0.80 percent) to 8,280.23, moving higher for the ninth time in the past 10 sessions, in a sign of continued optimism for a quick war.

The Nasdaq composite advanced 21.23 points (1.55 percent) to 1,391.01 and the Standard and Poor's 500 added 10.51 points (1.22 percent) to 874.74.

The markets were choppy throughout the day, getting a lift from President George W. Bush's comments about progress in Iraq and reports of a popular uprising in the southern Iraqi city of Basra.

But stocks pared their gains on news that the US Senate had voted in favor of slashing Bush's program of 726 billion dollars of tax cuts in half.

Dealers said the market held up well after Monday's heavy sell-off.

"It was a constructive performance," said Arnie Owen, managing director of equities at Roth Capital Partners.

"Reports that the inhabitants of Basra were rebelling against Iraqi soldiers was a very big positive and that popped us and then when we heard the Senate was cutting Bush tax plans to 350 billion dollars, the market began to fade."

"Comments from President Bush about the advance of allied forces gave the market a foundation to improve," said Alfred Goldman at AG Edwards. "The Dow rose to its best level of the day after a report that Iraqis in Basra rebelled against Saddam Hussein's military."

On the corporate front, oil stocks ended the day off highs as crude oil prices dipped on news of the Basra uprising which sparked hopes of a speedy end of the conflict.

ExxonMobil was up 36 cents at 35.67, ChevronTexaco rose 1.04 to 66.01 while ConocoPhillips edged up 94 cents to 52.02.

Halliburton, the oil services group, closed up 54 cents at 20.66 after the U.S. army awarded the main Iraqi oil well fire fighting contract to its Kellogg, Brown and Root subsidiary.

Airline stocks staged a partial recovery from Monday's steep declines amid talk the Bush administration will approve a rescue package to help the financially beleaguered industry, which faces more woes in a prolonged war.

AMR, parent company of American Airlines, was up 17 cents at 2.25, Northwest Airlines rose 71 cents to 8.08, Continental gained 19 cents to 5.84 while Delta edged up 29 cents to 9.81.

American Express, a player in banking as well as travel, slid 1.09 to 35.26 after Merrill Lynch cut its 2003 outlook "to reflect the current slowdown in spending and travel caused by the Gulf war."

The rest of the finance sector was higher with JP Morgan up 51 cents at 24.14, Goldman Sachs 77 cents higher at 70.69 while Citigroup gained 20 cents to 35.90.

Defense stocks handed back some of the gains seen Monday sparked by hopes the sector would be the recipient of more contracts as weekend setbacks for coalition forces suggested the war would be more protracted than initially thought.

Lockheed Martin closed down 45 cents at 45.96 while Northrop Grumman fell 66 cents to 83.77.

In technology, Hewlett-Packard was under-performing after rival Dell Computer launched its first own-brand printers and printing supplies at competitive pricing.

HP closed down four cents at 16.51 while Dell was 32 cents higher at 28.13.

Bonds were mixed, with the yield on the 10-year Treasury bond easing to 3.961 percent from 3.973 percent Monday and that on the 30-year bond rising to 4.938 percent against 4.931 percent. Bond yields and prices move in opposite directions.

Source: COPYRIGHT 2003 Agence France-Presse. All rights reserved.

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