Markets gather strength as massive U.S. bombing begins in Iraq, then pause as live footage is shown.
March 21, 2003: 1:17 PM EST
NEW YORK (CNN/Money) - U.S. stocks rallied Friday afternoon as the American-led war against Iraq kicked into its "shock and awe" phase, with more aggressive military action and further signs that the conflict could be short and successful.
More than halfway through an eighth straight day of gains, the Dow Jones industrial average (up 152.79 to 8439.39, Charts) rose more than 2 percent, the S&P 500 index (up 12.75 to 888.59, Charts) added nearly 2 percent, and the Nasdaq composite (up 14.84 to 1417.61, Charts) gained 1.5 percent, shortly after 1:00 p.m. ET.
A surge in the U.S. dollar on war optimism and a fleeing out of safe-haven commodities supported the broad-based equity advance, as did the latest "Saddam is dead" rumor reported on the BBC.
"I think investors are reacting positively to what's going on right now, with this new phase of the war," said Tom Schrader, head of listed trading at Legg Mason. "The more certain investors are that things are going well -- and they seem to be going very well -- the more hints we have that Saddam may be dead, the more investors are going to jump in."
Wall Street has not enjoyed eight days of market advances on the Dow since November 1996, when it rallied for 10 straight sessions. The market, which had seen a slow but steep decline as preparations for war went on, began its ascent once it learned that war was certain and about to start. Once it started, Wall Street bounced around on every news report and rumor coming from Iraq, but still found its way to a positive close Thursday, the first full day of military action.
Traders showed much stronger conviction Friday with the start of massive bombing over key Iraqi cities. Reports the U.S. military was meeting little resistance in its march toward Baghdad and in its effort to secure Iraqi airfields and oil fields added to the bullish sentiment. Only two U.S. combat casualties have been reported so far and pictures of Iraqi soldiers surrendering in droves and U.S. tanks advancing through the desert seemed to send a buy signal through the market. (For the latest coverage of the war, go to CNN.com.)
Some on Wall Street still expect to see a heightened level of volatility in the coming sessions as the market seesaws with every rumor that Iraqi President Saddam Hussein is dead, injured or deposed. The expiration Friday of stock and stock index futures and options could add to this jittery atmosphere.
But breadth remained positive on both the New York Stock Exchange and the Nasdaq, and volume continued to show improvement from the market's prewar days. Some 1 billion shares traded on the NYSE, where gainers outnumbered losers by more than 11 to 5. About 1.06 billion shares changed hands on the Nasdaq, with advancers beating declines by 9 to 5.
Although overshadowed by the war focus, the session also brought some interesting corporate news. Shares of CNN/Money parent AOL Time Warner (AOL: down $0.27 to $11.19, Research, Estimates) fell nearly 3 percent and topped the New York Stock Exchange's most-active list after Liberty Media (L: up $0.30 to $10.06, Research, Estimates) said Thursday that it plans to raise up to $1.75 billion from bonds that are exchangeable into AOL Time Warner stock, to bolster its acquisition war chest.
But AOL was an exception, with most media stocks gaining ground, including Dow component Walt Disney (DIS: up $1.04 to $18.18, Research, Estimates), which rose more than 6 percent and was one of the blue-chip indexes best performers. On the Dow industrials, 29 of 30 issued rose, with Dow stocks DuPont (DD: up $1.41 to $41.01, Research, Estimates) and Caterpillar (CAT: up $2.24 to $52.86, Research, Estimates) up 4 percent. Boeing was the lone decliner, with the jet maker falling on concerns that war could hurt its business, should air travel slow.
Additionally, a number of large-cap technology stocks paced the advance, with Intel (INTC: up $0.51 to $18.78, Research, Estimates) and Sun Microsystems (SUNW: up $0.05 to $3.70, Research, Estimates) up around 3 percent.
On the downside, shares of accounting software maker Intuit (INTU: down $11.08 to $39.81, Research, Estimates) fell more than 20 percent in active trade on the Nasdaq after the company warned late Thursday that earnings and revenue targets for 2003 won't meet estimates, due to sluggish sales amid the economic slowdown.
The stock market's winning run led to a continued rise in the yields of U.S. Treasury bonds. The benchmark 10-year note lost 1-4/32 of a point in price, its yield jumping to 4.10 percent. The dollar hit a three-month high against the euro and also gained versus the yen.
Friday's economic report, suggesting that inflation at the consumer level picked up amid the rising cost of energy products recently, did little to influence Wall Street's direction.
This was partially because oil prices continued their decline that began just before the start of the war. Light crude futures fell $1.52 to $26.60 a barrel in London. Gold fell $2.60 an ounce in New York to trade at $330.40.
Overseas markets took their tone from Wall Street and moved higher. Stocks in Europe rallied and Asian markets, with the exception of Tokyo, which was closed for a holiday, closed mostly higher.
"Shock and awe" rally
Moderator: S2k Moderators
Hopefully this is a good thing for the US economy which has been bruised and battered the last 12 months. It sure is nice to see the stock market going up instead of down - investors comiing out with their money now - since the suspense is gone?
Time will tell. Next week will be the real story?
Patricia
Time will tell. Next week will be the real story?
Patricia
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- southerngale
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- southerngale
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- Joined: Thu Oct 10, 2002 1:27 am
- Location: Southeast Texas (Beaumont area)
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