Shares fall on war, oil worries in post-holiday trading
By Eileen Alt Powell AP Business Writer
NEW YORK (AP) – Investors spooked by hostilities in Iraq and a steep rise in oil prices sent stocks lower in light, post-Christmas trading on Thursday.
Retailers were punished after Wal-Mart lowered its December sales expectations.
An afternoon sell-off followed a morning rally that had been sparked by a government report indicating that new claims for unemployment benefits were dropping. The Dow Jones industrial average climbed more than 116 points before reversing direction.
At the end of regular trading, the Dow was down 15.50, or 0.18 percent, at 8,432.61, according to preliminary tallies. Declines in Amazon.com and Microsoft helped pull the Nasdaq composite index down 4.58, or 0.33 percent, to 1,367.89, while the S&P 500 was off 2.81, or 0.31 percent, at 889.66.
The Russell 2000 Index which tracks the shares of smaller companies eked out a small gain.
Investors turned bearish after the U.S. military said warplanes from the U.S.-British coalition bombed Iraqi military command and communication targets Thursday in southern Iraq. The attack was in retaliation for the downing of an unmanned American surveillance drone on Monday, the military said.
The official Iraqi News Agency, quoting a military spokesman, countered that a mosque had been hit and that three civilians were killed and 16 others wounded in the attack.
The rising tension with Iraq, a major Middle Eastern oil producer, along with the continued strike in Venezuela sent oil prices soaring. Oil prices for February delivery jumped 52 cents to $32.49, and some analysts predict that the price could hit $35 soon.
Still, analysts cautioned against reading too much into Thursday’s trading.
Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, Wis., noted that “when volume is light, it doesn’t take much to move the market either way so I wouldn’t read a lot into it.”
Ralph Acampora of Prudential Securities in New York attributed Thursday morning’s gains to “a lack of sellers” and said trading continued a pattern of short-term rally followed by short-term decline.
“I think it is part of the market trying to bottom out in anticipation of a better year in 2003,” he said.
Wal-Mart said it was cutting its December same-stores sales forecast and now expects sales to gain 2 percent to 3 percent. It had predicted sales at the low end of a 3 percent to 5 percent range.
Investors apparently anticipated the reduced sales figures and sent Wal-Mart share up 6 cents to $49.76. But Federated fell 24 cents to $27.66, and Amazon.com dropped $1.58 to $20.30.
The decline for Amazon.com came despite the online retailer’s announcement that it finished its “busiest holiday season ever” with more than 56 million items ordered worldwide from Nov. 1 to Dec. 23. Analysts speculated that investors had been rattled by Wal-Mart’s report and so didn’t respond positively Amazon’s news.
Meanwhile, Pfizer and Pharmacia fell sharply after an article in the New England Journal of Medicine reported that the widely used arthritis drug Celebrex, made by Pharmacia, doesn’t protect the stomach from dangerous bleeding ulcers as much as thought. Pfizer and Pharmacia co-promote the drug. Pfizer dropped $1.36 to $30.02, while Pharmacia was down $2.02 to $40.98.
Microsoft fell 43 cents to $53.39 despite its announcement that shoppers spent a record $10.7 billion in the fourth quarter at its MSN network of Internet services.
A Labor Department report showed that new claims for jobless benefits fell by a seasonally adjusted 60,000 to 378,000 for the work week ending Dec. 21. The drop – the largest decline since Oct. 6, 2001, when claims fell by the same amount – left claims at their lowest level since Nov. 30.
The Russell 2000 index, which tracks smaller company stocks, rose 1.28, or 0.33 percent, to 389.40.
Declining shares exceeded advancers by eight to seven on the New York Stock Exchange, where volume was 710 million shares, compared with 586.12 million at the same time Tuesday.
Overseas, Japan’s Nikkei stock average finished Tuesday up 2.34 percent. European markets were closed for the post-Christmas holiday.
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