- NEW YORK (Reuters) - Stocks
sagged on Wednesday as worries about possible war with Iraq unnerved investors,
erasing a rally sparked by Secretary of State Colin Powell's speech to
the United Nations Security Council.
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- Powell's presentation, a bid to win over anti-war sentiment
at home and abroad as well as among governments, included satellite photos
and covertly taped conversations that he said showed that Iraq was hiding
banned weapons from inspectors.
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- Stocks climbed during the address as investors hoped
the evidence would convince other nations to support military action, but
the market took a tumble after Iraq's information minister said the allegations
were "hollow" and envoys from such key countries as France, Russia,
China and Germany remained leery of war and hoped inspections would continue.
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- Iraq's defiant rebuttal added to jitters that war with
Iraq may be longer and more costly than earlier anticipated, investors
said. Already, major market gauges have fallen for the year as companies
and consumer hold off spending, hurting corporate profits.
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- "This (war) is not going to be easy. It's not going
to be short and it's not going to be limited," said Hugh Johnson,
chief investment officer at First Albany Corp.
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- The blue-chip Dow Jones industrial average erased a 1.6
percent gain to fall 28.11 points, or 0.35 percent, to 7,985.18. The broader
Standard & Poor's 500 Index gave up 4.61 points, or 0.54 percent, at
843.59. The technology-laced Nasdaq Composite Index, which had gained more
than 2 percent, closed down 4.67 points, or 0.36 percent, at 1,301.48.
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- Declining stocks beat out advancers by a ratio of 9 to
7 on the New York Stock Exchange and Nasdaq. Trading was moderate, with
1.42 billion shares changing hands on the Big Board, and 1.35 billion traded
on Nasdaq.
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- "There was some general optimism over Powell's speech,
and that's rapidly dissipating into reality again -- the fact that we're
probably going to load up the ships and start pointing the guns pretty
soon," said Tony Cecin, head of equity trading at U.S. Bancorp Piper
Jaffray.
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- Adding to worries about geopolitical instability, North
Korea said it had restarted the atomic facilities at the center of its
suspected nuclear weapons program.
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- "People are starting to sense that (North Korea)
is more of a threat than even the administration is letting on," said
Keith Keenan, vice president of institutional trading at brokerage Wall
Street Access.
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- CISCO ERASES GAINS
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- Technology bellwether Cisco Systems Inc. closed unchanged
at $13.20 after the No. 1 maker of gear that directs Internet traffic posted
a record quarterly profit that topped estimates, helping take the sting
out of a soft sales outlook. Cisco was the most actively traded stock on
Nasdaq.
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- El Paso Corp. dropped $1.80, or 22.5 percent, to $6.20
and topped the New York Stock Exchange's most active and biggest percentage
losers lists. The largest U.S. pipeline company said it would slash its
dividend about 82 percent and sell nearly $3 billion in assets to conserve
cash and shore up its finances.
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- But things were looking up for the battered telecommunications
group. Sprint Corp., the No. 4 U.S. long-distance telephone company, said
it swung to a profit in the fourth quarter from a loss a year earlier as
cost-cutting outweighed weak demand and stiff competition for long-distance
and data services.
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- Sprint PCS, the wireless unit, rallied 31 cents, or 8.4
percent, to $4. Sprint FON, which represents Sprint's long distance and
local phone and data businesses, gained 16 cents to $12.52.
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- Alcoa Inc. helped pare losses in the blue-chip Dow, rising
67 cents to $19.84 after investment bank Prudential Securities raised its
rating for the world's largest aluminum producer to "buy" from
"hold," saying "price appreciation can be expected as Alcoa
begins to execute its debt- and cost-reduction programs."
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- Food retailer and distributor Nash Finch Co. lost more
than half its market value after it became the latest company to say it
was being investigated by the U.S. Securities and Exchange Commission.
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- Shares tumbled $4.58, or 52 percent, to $4.30 after the
company said the SEC was launching a formal investigation and its accountants
at Deloitte & Touche had resigned. The accountants were appointed only
six months earlier. (Additional reporting by Elizabeth Lazarowitz and Herb
Lash)
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