Heavy-duty selling on Wall Street
Posted: Mon Mar 24, 2003 12:37 pm
Heavy-duty selling on Wall Street
U.S. stocks pummeled on realization that war in Iraq won't be an easy blitz campaign.
March 24, 2003: 11:37 AM EST
NEW YORK (CNN/Money) - Signs that a war with Iraq will be longer and more treacherous than anticipated knocked U.S. stocks sharply lower Monday morning.
Shortly before 11:30 a.m. ET the Dow Jones industrial average (down 263.87 to 8258.10, Charts), the Nasdaq composite (down 41.53 to 1380.31, Charts), and the S&P 500 index (down 27.03 to 868.87, Charts) showed losses of about three percent.
"Obviously, the events over the weekend have changed market psychology and people are using that as an opportunity to take profits after the huge rally of the last week," said Peter Cardillo, director of research at Global Partners Securities. "Markets had rallied on the certainty of war and on the belief that it would be quick and with few casualties. But we're seeing that's not the case. The breaking down of the Iraqi army that was talked about in the first few days was clearly overstated."
Monday's selloff came on the heels of one of the strongest rallies on Wall Street in years. With a gain of 8.4 percent last week, the Dow industrials had their best weekly advance since 1982. The average climbed about 1,000 points during the past eight trading sessions.
"Considering the run we've had, this could be a lot worse," Cardillo said.
But Wall Street's war euphoria came to an abrupt halt Monday, when traders returned to their desks having watched footage of tough battles and reports of U.S. casualties and the capture of U.S. soldiers over the weekend. Despite little factual evidence on its side, Wall Street had placed heavy bets that the war would be short and swift, bolstered by rumors that Iraqi President Saddam Hussein was either injured or dead as a result of U.S. air strikes on Baghdad. (For the latest war developments, go to CNN.com.)
The news over the weekend and early Monday, including an appearance by a defiant Hussein on Iraqi television, indicated otherwise and the selling that came to the stock market was punishing.
"For the next few days, markets will remain nervous and continue taking cues from the Iraq news," Cardillo added.
Market breadth was overwhelmingly negative and volume was heavy. On the New York Stock Exchange and on the Nasdaq, four stocks fell for every one that rose. About 436 million shares traded on the NYSE and some 478 million shares changed hands on the Nasdaq.
All 30 Dow stocks fell early Monday, with Disney (DIS: down $1.21 to $17.53, Research, Estimates) being the biggest loser after a drop of almost 7 percent, despite being a big winner at the Oscars Sunday night. Wal-Mart (WMT: down $1.70 to $52.97, Research, Estimates), which reiterated its estimates for sales in March despite a slowdown over the weekend as consumers stayed home to watch the latest war news, declined almost 3 percent.
The stock market selling drove investors back to the perceived safety of U.S. Treasury bonds, which rallied sharply. The benchmark 10-year note climbed a full point in price, its yield retreating to 3.98 percent. The dollar fell against both the euro and the yen.
Oil prices soared on the prospect of a longer Middle East war, with light sweet crude futures gaining $1.02 to $27.93 a barrel in New York. The price of oil had dropped over the last week and a half while stocks were rallying. This trend reversed Monday with oil and energy stocks, including Schlumberger (SLB: down $0.80 to $38.12, Research, Estimates) and Exxon Mobil (XOM: down $0.49 to $35.51, Research, Estimates), taking a hit.
Gold rallied $3.60 to $329.70 an ounce in New York after having fallen in the flight to equities. Gold stocks surged, with Glamis Gold (GLG: up $0.36 to $9.50, Research, Estimates) up nearly 5 percent and Kinross Gold (KGC: up $0.24 to $5.52, Research, Estimates) up more than 6 percent.
Overseas stock markets were mixed, with European stocks selling off in afternoon trading and Asian markets closing mixed overnight.
U.S. stocks pummeled on realization that war in Iraq won't be an easy blitz campaign.
March 24, 2003: 11:37 AM EST
NEW YORK (CNN/Money) - Signs that a war with Iraq will be longer and more treacherous than anticipated knocked U.S. stocks sharply lower Monday morning.
Shortly before 11:30 a.m. ET the Dow Jones industrial average (down 263.87 to 8258.10, Charts), the Nasdaq composite (down 41.53 to 1380.31, Charts), and the S&P 500 index (down 27.03 to 868.87, Charts) showed losses of about three percent.
"Obviously, the events over the weekend have changed market psychology and people are using that as an opportunity to take profits after the huge rally of the last week," said Peter Cardillo, director of research at Global Partners Securities. "Markets had rallied on the certainty of war and on the belief that it would be quick and with few casualties. But we're seeing that's not the case. The breaking down of the Iraqi army that was talked about in the first few days was clearly overstated."
Monday's selloff came on the heels of one of the strongest rallies on Wall Street in years. With a gain of 8.4 percent last week, the Dow industrials had their best weekly advance since 1982. The average climbed about 1,000 points during the past eight trading sessions.
"Considering the run we've had, this could be a lot worse," Cardillo said.
But Wall Street's war euphoria came to an abrupt halt Monday, when traders returned to their desks having watched footage of tough battles and reports of U.S. casualties and the capture of U.S. soldiers over the weekend. Despite little factual evidence on its side, Wall Street had placed heavy bets that the war would be short and swift, bolstered by rumors that Iraqi President Saddam Hussein was either injured or dead as a result of U.S. air strikes on Baghdad. (For the latest war developments, go to CNN.com.)
The news over the weekend and early Monday, including an appearance by a defiant Hussein on Iraqi television, indicated otherwise and the selling that came to the stock market was punishing.
"For the next few days, markets will remain nervous and continue taking cues from the Iraq news," Cardillo added.
Market breadth was overwhelmingly negative and volume was heavy. On the New York Stock Exchange and on the Nasdaq, four stocks fell for every one that rose. About 436 million shares traded on the NYSE and some 478 million shares changed hands on the Nasdaq.
All 30 Dow stocks fell early Monday, with Disney (DIS: down $1.21 to $17.53, Research, Estimates) being the biggest loser after a drop of almost 7 percent, despite being a big winner at the Oscars Sunday night. Wal-Mart (WMT: down $1.70 to $52.97, Research, Estimates), which reiterated its estimates for sales in March despite a slowdown over the weekend as consumers stayed home to watch the latest war news, declined almost 3 percent.
The stock market selling drove investors back to the perceived safety of U.S. Treasury bonds, which rallied sharply. The benchmark 10-year note climbed a full point in price, its yield retreating to 3.98 percent. The dollar fell against both the euro and the yen.
Oil prices soared on the prospect of a longer Middle East war, with light sweet crude futures gaining $1.02 to $27.93 a barrel in New York. The price of oil had dropped over the last week and a half while stocks were rallying. This trend reversed Monday with oil and energy stocks, including Schlumberger (SLB: down $0.80 to $38.12, Research, Estimates) and Exxon Mobil (XOM: down $0.49 to $35.51, Research, Estimates), taking a hit.
Gold rallied $3.60 to $329.70 an ounce in New York after having fallen in the flight to equities. Gold stocks surged, with Glamis Gold (GLG: up $0.36 to $9.50, Research, Estimates) up nearly 5 percent and Kinross Gold (KGC: up $0.24 to $5.52, Research, Estimates) up more than 6 percent.
Overseas stock markets were mixed, with European stocks selling off in afternoon trading and Asian markets closing mixed overnight.
Just what we need another situation :o