Stocks dip slightly; instability expected

The Associated Press By Amy Baldwin

NEW YORK — Inertia settled over Wall Street yesterday, leaving stocks little changed as the market waited for news indicating allied forces were making progress in Iraq. The major indexes closed slightly lower.

Stocks are expected to remain vulnerable amid uncertainty about the war. Wall Street's chief concern is that the fighting could last months, posing an additional risk to the economy as uneasy businesses and consumers curtail spending.

"Every delay in ending the war is just going to be negative for the market," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.

The Dow Jones industrial average closed down 28.43 at 8,201.45. The Dow retreated 50.35 on Wednesday and shed 307.29 on Monday, the market's worst day in six months.

Dow components Microsoft and Boeing went in opposite directions, as Microsoft edged 21 cents lower to close at $25.04 per share and Boeing added 12 cents to $26.52.

The market's broader gauges also posted modest losses. The Nasdaq composite index fell 3.20 to 1,384.25. The Standard & Poor's 500 index declined 1.43 to 868.52.

In the past 2-1/2 weeks, investors have gone from feeling euphoric and optimistic the war would be over soon, to deeply fearful that fighting would drag on. Yesterday, they seemed almost detached in the absence of significant war developments.

The market again saw some profit-taking yesterday, as more investors sought to preserve the gains they made when stocks surged higher in the optimistic days leading up to the war and the first few days of fighting. The Dow has given back about 386 points, or nearly 40 percent, of the 997 points it gained over the course of eight sessions.

Once again, the economy gave investors reason to be pessimistic. The Commerce Department reported yesterday that the economy as measured by gross domestic product grew at a lackluster 1.4 percent annual rate in the fourth quarter of 2002, meeting analysts' expectations. Many analysts predict the economy could fare worse in the current quarter as the sluggish job market and war uncertainties make consumers and businesses even more cautious.

Gold/oil

In U.S. trading, gold continued to slip, giving up $1.70 to $328.40 per ounce.

Oil prices gained $1.99 to $30.47 a barrel, the first time they've been above $30 a barrel since war broke out in Iraq.

Prices have climbed nearly 13 percent since last Friday, when they hit a three-month low as concerns about worldwide supplies replaced early hopes for a quick end to the Iraq war.

Traders, who expect the volatility to continue at least until the end of fighting in Iraq, have plenty to worry about:

• Commercial inventories of crude are extremely low in the United States at a time when refiners are cranking out gasoline for the summer driving season.

• Iraqi exports have ceased and supplies from Nigeria and Venezuela are down because of labor strife, taking more than 3 million barrels a day out of the market.

• Finally, analysts said the extra petroleum being pumped by Saudi Arabia and other OPEC members to offset that shortfall hasn't entirely reached U.S. shores and might not be enough to calm markets when it does.