Market barometers stumble

Journal Record, The (Oklahoma City), Apr 4, 2002

NEW YORK (AP) -- Worries that rising tensions in the Middle East could quash the economic recovery drove stock prices sharply lower Wednesday, with the Dow industrials dropping more than 100 points in their fourth straight losing session.

Analysts said investors have no reason to commit to stocks, including those priced lower after two weeks of consistent selling.

"The worry is that the turmoil in the Middle East will lead to a rise in oil prices and derail the economic recovery," both in the United States and globally, said Hugh Johnson, chief investment officer at First Albany. "It is very troubling. It is very nerve racking. You can't help but be worried."

The Dow closed down 115.42, or 1.1 percent, to 10,198.29. The blue chip index has lost 228.62, or 2.2 percent, in the past four sessions. The Dow also posted its lowest close in five weeks, having last finished lower on Feb. 28, when it stood at 10,106.13.

The broader market also stumbled. The Nasdaq Composite index declined 20.05, or 1.1 percent, to 1,784.35 after falling 58.22 Tuesday to its lowest close in a month. The Standard & Poor's 500 index fell 11.36, or 1.0 percent, to 1,125.40.

The downturn came as the Middle East conflict worsened with Israeli tanks entering Nablus, the West Bank's largest city, and with Palestinian leader Yasser Arafat remaining a prisoner of Israel. Wall Street analysts said fears are high that oil prices will spike higher and push the worldwide economy back into recession. On Monday, Iraq's Saddam Hussein called for a new oil embargo as punishment to the United States and Israel.

With the economic recovery at stake, investors took profits made in February and the first half of March amid a series of encouraging economic reports. The Dow is now down 4.1 percent from its high for the year, 10,635.25 on March 19.

Technology and telecommunications stocks were among the weakest Wednesday. Many analysts expect the sectors to be the last to recover from the recession because of a continued lag in demand. IBM fell $1.05 to $99.96 the day after Goldman Sachs cut its first quarter revenue estimate on the Dow industrials. Chip maker Micron Technology declined $1.62 to $30.78 following a ratings downgrade by Morgan Stanley. WorldCom fell 27 cents to $6.51 on news that the company will cut 3,700 jobs in the United States. Additionally, Lehman Brothers downgraded the telecom stock.

Downgrades by brokerages hurt stocks of other companies as well. Dow industrial Caterpillar stumbled $1.48 to $54.92 after J.P. Morgan Chase lowered its rating. Selling spread across most of Wall Street, however, and even positive news from some companies failed to trigger buying. DuPont, also a Dow stock, fell 68 cents to $46.67 despite its forecast that first quarter earnings will exceed analysts' expectations.