< ahref=sg.biz.yahoo.com>Read source Monday March 24, 12:00 PM (From The Wall Street Journal) By Craig Karmin

THE LONG-AWAITED war rally has begun. But after a weekend of hard fighting in Iraq, some have started to wonder how long the war rally will run.

The Dow Jones Industrial Average and the Standard & Poor's 500-stock index each are on an eight-session streak, the first time the Dow industrials have had such a run-up since 1998, and the S&P's first since 1997.

Once war in Iraq became imminent, the Dow industrials have risen 997.56 points, or 13%, and the Nasdaq Composite Index is up 12%, enough to wipe out earlier losses and send both benchmarks up so far this year. Last week's gain for the Dow industrials was 8.4%, the biggest weekly advance in more than 20 years, going back to October 1982.

For most investors and traders, the template for the rally has been clear: By studying what happened to stocks the last time the U.S. took on Saddam Hussein in 1991, they can see a blueprint for what to expect this time.

And so far, the comparisons have held up. Then, as now, the economy was facing a severe strain. Oil prices were high, and the financial system was working through a period of excess that ended with the bursting of a financial bubble and stock-market decline.

But many analysts and economists now are worried that the analogy is being carried too far. Despite these apparent similarities, analysts warn that the economy and the stock market face a number of important challenges and uncertainties that were missing at the start of the previous Gulf War. And, they say, those differences could be substantial enough to make comparisons to 1991 irrelevant.

"Today's world is a far more unstable and much scarier place than it was in the aftermath of the Gulf War of 1991," says Stephen Roach, Morgan Stanley's chief global economist.

All of this has produced some fears that the current stock-market rally may soon run its course, perhaps even faster than the rally sparked by the Gulf War. In 1991, the Dow industrials jumped 15% from Jan. 17, the day Operation Desert Storm was launched, to Feb. 28, when a cease-fire was declared. From there, however, the market was stuck in a trading range and ended the year down 10% from when the war ended.

This time, the markets have entered the war in a much weaker position. Despite the recent rally, the Dow industrials still are down by nearly 20% from a year ago and the Nasdaq composite is down about 25%. On Friday, stocks closed up sharply on news of an intensive air campaign in Baghdad and more rumors that Mr. Hussein may have been killed or injured. In the New York Stock Exchange's most active session of the year, the Dow industrials rose 235.37 points, or 2.8%, to 8521.97, while the Nasdaq was up 1.4%, or 19.07 points, to 1421.84.

Yet many traders already worry that this rally could soon fade. The military task, for one, was clearer in the previous war, when the goal was to expel invading Iraqi troops from Kuwait. Today, military planners are facing the much more complicated task of removing Mr. Hussein's regime from power and rebuilding the country.

And even once that happens, U.S. military challenges won't be over. The U.S. still faces a threat from global terrorism, and other potential international crises loom in North Korea and Iran.

Nor should investors count on an economic rebound once the guns fall silent. The economy in 1991 was in the middle of a recession and continued to struggle long after the first Gulf War was over. Although the economy now is further along in the economic cycle than it was 12 years ago, a number of analysts warn that the recovery lag could take as long, and perhaps longer.

Many companies are still trying to reduce their debt, a strain that has discouraged new capital spending. State and local governments -- compelled by law in many states to balance their budgets -- have been raising taxes and cutting spending programs, providing another drag on the economy. American household debt is also at record levels, and economists say the savings rate is inadequate.

"All these factors will still be in play even if the war gets resolved in a favorable way," says Bill Dudley, chief U.S. economist for Goldman Sachs. "The economy looks weak and vulnerable to a shock."

The global economy, meanwhile, is in worse shape today than a dozen years ago, meaning that U.S. companies can't count on demand in Europe or Japan to compensate for a weaker domestic market. And since the U.S. is launching this fight without clear backing from the United Nations, Washington will be responsible for a bulk of the war costs.

"The only thing that looks better today than 12 years ago is that U.S. productivity numbers are up," says David Rosenberg, chief North American economist for Merrill Lynch.

From a valuation perspective, stocks were more attractive then. The current price-to-earnings ratio based on trailing 12-month earnings for the S&P 500-stock index is 31 -- about double that of 1991.

And many economists argue that the stock-market excesses of the late 1990s were so spectacular that it is going to take much longer to work through the excess than it did earlier in the decade. "This is a bigger bubble and with more pernicious effects," Mr. Rosenberg says.

While the Federal Reserve aggressively cut interest rates in 1991 and 1992 -- cutting the federal-funds rate 13 times, to 3% from 7% -- the situation today is much trickier. Now, that rate is at 1.25%, leaving the Fed little room to cut rates again if the war runs into trouble or if the economy weakens further.

Mr. Rosenberg notes that the 12 interest-rate cuts during the current easing cycle haven't done much so far to revive the economy because business overcapacity, rather than prohibitively high rates, is responsible for the downturn.

A domestic slowdown would be less of a worry if markets overseas looked healthy. But as in 1991, that's not the case. "The world wasn't helping much then, and it isn't helping much now," says Carl Weinberg, chief economist for High Frequency Economics in Valhalla, N.Y. "Actually, it's bit worse today."

He notes that Europe's economy was slumping in 1991, too. But European governments were taking much more aggressive steps to stimulate their economies through fiscal and monetary policy, so that Germany and the United Kingdom enjoyed healthy rebounds by 1993. Moreover, Japan's economy, now moribund, was still strong, growing at a rate of 5% in the first quarter of 1991, compared with essentially no growth expected today.

U.S. corporations are still in the process of repairing their balance sheets by reducing debt. And even as many companies cut costs to the bone, the profit downturn is lasting much longer, and has been much deeper, than in 1991 because of an inability to raise prices following a long period of corporate overinvestment.

Consumer borrowing is another concern. Household debt as a percentage of gross domestic product stands at a record 83%, compared with 64% in 1991. Lower interest rates today take sting out of the debt load, but many analysts still think the burden is greater this time.

At the same time, the U.S. has moved from a current-account surplus in the first quarter of 1991 to a widening current-account deficit. This increases U.S. dependency on foreign capital, but it also suggests that the dollar will continue to weaken, which discourages foreign investors from buying U.S. stocks.

As in the fourth quarter of 1990, oil prices have been rising and approached $40 a barrel this month. In the weeks following Kuwait's liberation, prices plummeted to around $20 as supply concerns eased. This time, oil has already fallen to below $27, and analysts say there could be further declines when the conflict in Iraq is over, though not to the same levels seen in 1991 because circumstances have changed.

Venezuela has yet to return to full production following its recent oil-workers strike, and many other suppliers are near their capacity for pumping oil. Refining companies and other large oil consumers face low stock inventories. Higher energy costs, of course, hit the bottom line of U.S. companies.

Friday's Market Activity

Hopes that the war could be decisive and short helped drive strength in a number of individual stocks and sectors. Airlines, for instance, were the top performers, with Southwest Airlines gaining $1.04, or 7.3%, to $15.28 even though analysts point out that the majority of the stocks in the group remain significantly below levels of 18 months ago and a short war doesn't necessarily remove the threat of a bankruptcy for some companies.

Walt Disney shares gained 1.60, or 9.3%, to 18.74 on speculation a short war would ease concerns about visiting tourist spots such as Disney's theme parks.

Intuit slid 12.17, or 24%, to 38.72 on Nasdaq after the tax-software company scaled back earnings expectations.

-- Shaheen Pasha

Read more.. Monday March 24, 11:34 AM Contact Us: Hong Kong (852) 2802-7002

1134 [Dow Jones] May Nymex crude may have been oversold on speculation of quick U.S.-led victory in Iraq, says HSBC oil and gas analyst Gordon Kwan; "prices could retest $30 a barrel again this week unless the military operations were extremely smooth going into Baghdad." Deteriorating situation in Nigeria, off-peak production in Venezuela and some lost output in Iraq, Kuwait to help prop up prices. (ILK)

1119 [Dow Jones] HKEx (0388) down 5.2% at HK$9.05, after government consultants recommend HKEx to transfer listing function to SFC, which market fears will hurt HKEx's income. UBS Warburg thinks loss of listing function "marginally negative for HKEx"; while HKEx may lose some income from high-growth listing business, UBS points out it could shed regulatory burden, and then be allowed to "focus more on commercial interests". Keeps Neutral call on stock. (IVW)

1113 [Dow Jones] Shandong Xinhua Pharmaceutical (0719) down 3.0% at HK$1.61 after posting 16% on-year fall in FY02 net profit to CNY68.4 million; 25% cut in final dividend to 6 fen also weighing on shares. Near-term weakness may continue due to lack of interest in shares; so far only 50,000 shares have changed hands. (RLI)

1110 [Dow Jones] Suspended Haier-CCT (1169) may issue statement later just to say not aware of any reasons for recent share price movements, rather than announcing asset injection, source says. Stock volatile since 29.9%-shareholder Haier Group hinted in February its white goods business may be injected into Haier-CCT. Haier-CCT has earlier said talks ongoing, and company may reiterate this on back of persistent speculation in its shares; pre-suspension price at 24.2 HK cents. (IVW)

1102 [Dow Jones] Oil prices may not fall as fast as they did after first Gulf War because of low inventories, says Shell global business environment manager David Frowd. "Stocks today, particularly in the U.S., are very low, supporting prices in the upper 20s (dollars a barrel) even without a war premium," he tells oil conference in Melbourne. Says OPEC capacity enough to cover lost Iraqi output, provided no interruptions in Venezuela or elsewhere. (AND)

1056 [Dow Jones] Illiquid Lai Sun Development (0488) still untraded at 3.1 HK cents, after company announces plans to cut a HK$625 million term loan by two-thirds, via transfer of 20% interest in Furama project, and assignment of HK$600 million face value of shareholder's loan to lenders. Little effect on Lai Sun shares expected as company still weighed down by huge liabilities (HK$8.2 billion as at February). (IVW)

1054 [Dow Jones] Monitor maker Proview (0334) extends Friday's 7.7% rally, up 4.1% at HK$1.02, after posting 267% on-year jump in 1H03 net profit to HK$73.3 million. Kim Eng Securities maintains buy rating even with stock up 54.5% in year-to-date; says despite management caution over 2H03 outlook due to war in Iraq, "growth momentum in place" as company licenses two new brands (Xerox, Sylvania), expands production capacity, improves margins. (RLI)

1042 [Dow Jones] Johnson Electric (0179) up 3.2% at HK$9.6, buoyed by continued Wall Street gains Friday. Stock also likely lifted by SCMP report quoting analysts as saying $750 million bid for GE's motor unit unlikely because company targeting low-risk takeover targets, may invest up to $200 million in new acquisitions. News should ease investors' gearing, integration concerns over potential bid for GE unit. Shares gain for 5th straight session (up 15% so far), but some profit-taking likely if U.S. stocks pull back. (RLI)

1031 [Dow Jones] HSI up 0.6% at 9238 on broad-based gains after U.S. stocks advanced further Friday; Prime US-exposure plays Johnson Electric (0179), up 3.8% at HK$9.65, Li & Fung (0494) up 2.4% at HK$8.45. PCCW (0008) again underperforms, down 0.5% at HK$4.775, on disappointment company's first-ever dividend to be delayed. Trader says short-covering, rampant last week, evidently weakening, but valuations, "caution of shorters" should continue to support HSI. Immediate resistance around 9270, then 9500 likely next resistance level. (IVW)

1024 [Dow Jones] SCMP Group (0583) up 1.8% at HK$2.9, with company due to report FY02 results later today. Daiwa Institute of Research expects company to post 16% on-year increase in net profit to HK$191 million, above Multex consensus of HK$182 million; but says "cautious about the pace of recovery in advertising revenue" due to low visibility on employment, private consumption. May consider downgrading stock if no positive news reflected in results. (RLI)

1023 [Dow Jones] Hospitalization of HK Hospital Authority Chief Executive William Ho with symptoms of atypical pneumonia likely to give HK political leaders pause for thought. Ho's apparent affliction (though this not confirmed) with severe acute respiratory syndrome inevitably raises question of whether he could have been in a position to pass on the mystery illness to HK's top leaders, including Chief Executive Tung, whom he has briefed in recent days on the illness. (JWR)

1018 [Dow Jones] According to trading screen, Haier-CCT (1169) shares suspended, but no reason given yet. Haier-CCT has earlier indicated in talks with 2nd biggest shareholder Haier Group (which owns 29.94% stake) about buying latter's white goods business. Suspension could be for confirmation of deal, or to reiterate talks ongoing, effectively quelling speculation. Haier-CCT ended up 29% at 24.2 HK cents on Friday, has been volatile since potential deal mooted.(IVW)

1001 [Dow Jones] MSNBC TV quotes unnamed U.S. military officials as saying special operations teams and units of CIA are in Baghdad; officials hint recent explosions there (with no air raid sirens or indications of U.S. aircraft overhead) may have been work of Iraqi resistance groups, possibly working with U.S. forces. Unclear if this is just U.S. disinformation, but it may help sustain markets' hopes for quick U.S. victory. (AXT)

Update Monday March 24, 7:41 AM By Stephen Parker Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Oil prices slid nearly 30% in the past seven trading days as the market bet on a best-case resolution of the war in Iraq, but fierce resistance Sunday slowed coalition forces' push toward Baghdad and could provide the first real test of the market's optimism, analysts said.

U.S. Central Command said Iraqis using ruses, including faked surrenders followed by ambushes, killed some coalition soldiers in the Al-Nasiriya area of southern Iraq. Other difficulties included Iraq's capture of a handful of U.S. soldiers, the accidental downing of a U.K. aircraft by a U.S. missile, and a grenade attack on forces in Kuwait blamed on a Muslim U.S. soldier.

U.S. President George W. Bush and U.S. military officials said the Iraqi regime ultimately will fall, but warned of tougher fighting to come as U.S.-led forces advance on Baghdad.

Day-to-day developments in the war aside, the long-term trend for oil prices is still seen as down. But heavy selling in recent sessions has left the market vulnerable to spikes, analysts said.

"Any setbacks at this point could generate a rally in an oversold market," Cameron Hanover analyst Peter Beutel said Sunday. "I don't see the price going back over $40, but these rallies will be sharp - they won't be timid affairs."

Another potentially bullish development emerged in Nigeria Sunday, when ChevronTexaco Corp. (CVX) shut down 440,000 barrels a day of oil production in the western Niger Delta due to ethnic violence. Royal Dutch/Shell (RD) and TotalFinaElf (TOT) have also shut in some production there, leaving 28% of the country's 2.2 million barrels a day in output off line.

Light, sweet crude futures closest to expiration fell below $27 a barrel Friday on the New York Mercantile Exchange after hitting a Feb. 27 peak near $40.

U.S. government and oil-industry analysts said that major oil producers' increased exports would fill any supply gap created by the loss of Iraqi oil production and that a short war would lead to a relatively quick resumption of Iraqi oil exports. Until the weekend, developments hadn't challenged that view.

Hoping For The Best

Last week, Merrill Lynch analysts summed up the market's optimistic sentiment, saying, "The general retracement we're seeing in oil prices reflects the hope for a 'perfect storm' of sorts where Iraq's infrastructure goes largely unscathed and no other supply dislocations develop from a war."

A key concern for the oil market is not only whether the coalition takes Baghdad, but whether Iraq's roughly 2,000 oil wells are quickly secured with minimal damage. Iraq's oil-export operations have shut down since U.N. officials left the country and buyers dried up as war ensued.

Only a handful of Iraqi oil wells were known to be damaged Sunday, and southern fields were under U.S. and British military control, but coalition forces still hadn't secured the country's rich oil fields in the north.

For now, the oil market appears adequately supplied. The Organization of Petroleum Exporting Countries has increased its oil output to 26.5 million barrels a day - just 400,000 barrels a day below the level that preceded Venezuela's two-month general strike, according to the U.S. Department of Energy's statistical arm. The increase comes despite the loss of Iraqi oil production and some lost output in Venezuela and Nigeria, the Energy Information Administration said Friday.

Barring a major disruption in the Middle East beyond the lost Iraqi production, some industry analysts expect oil prices to end the year around $25 a barrel in New York.

"There's definitely still potential for upside risk, but in my view that thought process has been overblown," Jacques Rousseau, senior analyst at Friedman, Billings, Ramsey & Co. Inc., an institutional brokerage, research and investment banking company, said Friday. "Any time the world has enough time to see something like this coming, they get prepared."

Rousseau projected the U.S. oil price will drop from about $35 a barrel in the first quarter to $26 in the second, ending the year around $23.

Nigeria A Wild Card

Erik Kreil, the EIA oil analyst who updated the agency's OPEC supply report Friday, said oil prices are now at the bottom of the range justified by supply and demand fundamentals.

"When we look at what the fundamental price should be based on inventories, $27 would be a fair number," Kreil said. "A price of $28 to $30 is what we would have said, based on inventories and other market fundamentals."

U.S. commercial inventories of crude oil remain near a 27-year low at 270.2 million barrels, just above the level at which the EIA said refiners could experience supply or production difficulties.

Commercial crude stocks remain low primarily because U.S. oil prices above $30 a gallon this year were too high to risk holding inventories, not because oil isn't available to store, analysts said.

A seasonal decline of about 2 million barrels a day in world oil demand is expected in spring, allowing U.S. refiners to begin restocking ahead of the summer driving season, Rousseau said.

Venezuela, a key OPEC producer, has already restored its oil output to at least 2.4 million barrels a day, nearing the level that preceded its strike that began in December. The recovery occurred faster than most had anticipated, easing concern that war in Iraq would mean the simultaneous loss of two major OPEC members' oil.

But with U.S. oil inventories stretched tight and producers nearing the limits of their capacity, there is little margin for error in the event of further disruptions, like those in Nigeria, the fifth-largest source of U.S. oil imports in 2002.

Nigeria's low-sulfur, or "sweet," crude is valued for the high quantities of gasoline it yields. A prolonged disruption of Nigeria's output could drive up U.S. gasoline prices, which reached a record high of $1.728 a gallon on March 17, Kreil said.

"There isn't a large source of light, sweet crude substitute waiting to come on for Nigeria," Kreil said. "If it continues to worsen, that's definitely going to be a concern for gasoline."

Beyond the war uncertainties and Nigerian disruption, Rousseau said the pace of economic recovery will reclaim its prominence in oil-market psychology. If U.S. economic growth this year is below normal as forecasts indicate, demand for oil and refined products will follow suit and apply downward pressure on prices, Rousseau said.

-By Stephen Parker, Dow Jones Newswires; 201-938-4426; stephen.parker@dowjones.com

IN THE U.S., the long-awaited war rally is in full gear. Monday March 24, 5:32 AM (From The Asian Wall Street Journal) By Craig Karmin

The Dow Jones Industrial Average and the Standard & Poor's 500-stock index each are on an eight-session streak, the first time the Dow industrials have had such a run-up since 1998, and the S&P's first since 1997.

Since war in Iraq became imminent, the Dow industrials have risen 997.56 points, or 13%, and the Nasdaq Composite Index is up 12%, enough to wipe out earlier losses and send both benchmarks up so far this year. Last week's gain for the industrials was 8.4%, the biggest weekly advance in more than 20 years, going back to October 1982.

For most investors and traders, the template for the rally has been clear: By studying what happened to stocks the last time the U.S. took on Saddam Hussein in 1991, they can see a blueprint for what to expect this time around. So far, the comparisons have held up. Then, as now, the U.S. economy was facing a severe strain. Oil prices were high, and the financial system was working through a period of excess that ended with the bursting of a financial bubble and stock-market decline.

But many analysts and economists now are worried the analogy is being carried too far. Despite these apparent similarities, analysts warn that the U.S. economy and the stock market face a number of important challenges and uncertainties that were missing at the start of the previous Gulf War. They add those differences could be substantial enough to make comparisons to 1991 irrelevant. "Today's world is a far more unstable and much scarier place than it was in the aftermath of the Gulf War of 1991," says Stephen Roach, Morgan Stanley's chief global economist.

All of this has produced some fears the current U.S. stock-market rally may soon run it course, perhaps even faster than the rally sparked by the Gulf War. In 1991, the Dow industrials jumped 15% from Jan. 17, the day Operation Desert Storm was launched, to Feb. 28, when a cease-fire was declared. From there, the market was stuck in a trading range and ended the year down 10% from when the war ended.

This time, the markets have entered the war in a much weaker position. Despite the recent rally, the Dow industrials are down by nearly 20% during the past year and the Nasdaq composite is down about 25%. On Friday, stocks closed up sharply on news of an intensive air campaign in Baghdad and more rumors Mr. Hussein may have been killed or injured. In the New York Stock Exchange's most active session of the year, the Dow industrials rose 235.37 points, or 2.8%, to 8521.97, while the Nasdaq was up 1.4%,or 19.07 points, to 1421.84.

Yet many traders already worry this rally could soon fade. The military task was clearer in the previous war, when the goal was to expel invading Iraqi troops from Kuwait. Today, military planners are facing the much more complicated task of removing Mr. Hussein's regime from power and rebuilding the country.

Even once that happens, U.S. military challenges won't be over. The U.S. still faces a threat from global terrorism, and other potential international crises loom in North Korea and Iran.

Nor should investors count on an economic rebound in the U.S. once the guns fall silent. The economy in 1991 was in the middle of a recession and continued to struggle long after the first Gulf War was over. Although the economy is further along in the economic cycle than it was 12 years ago, a number of analysts warn that the recovery lag could take as long, and perhaps longer.

Many U.S. companies are trying to reduce debt, a strain that has discouraged new capital spending. State and local governments -- compelled by law in many states to balance their budgets -- have been raising taxes and cutting spending programs, providing another drag on the economy. American household debt is at record levels, and economists say the savings rate is inadequate. "All these factors will still be in play even if the war gets resolved in a favorable way," says Bill Dudley, chief U.S. economist for Goldman Sachs. "The economy looks weak and vulnerable to a shock."

The global economy is in worse shape today than a dozen years ago, meaning U.S. companies can't count on demand in Europe or Japan to compensate for a weaker domestic market. Since the U.S. is launching this fight without clear backing from the United Nations, Washington will be responsible for a bulk of the war costs.

"The only thing that looks better today than 12 years ago is that U.S. productivity numbers are up," says David Rosenberg, chief North American economist for Merrill Lynch.

From a valuation perspective, stocks were more attractive then. The current price-to-earnings ratio based on trailing 12-month earnings for the S&P 500-stock index is 31 -- about double that of 1991. Many economists say the stock-market excesses of the late 1990s were so spectacular it is going to take much longer to work through the excess than it did earlier in the decade. "This is a bigger bubble and with more pernicious effects," Mr. Rosenberg says.

While the U.S. Federal Reserve aggressively cut interest rates in 1991 and 1992 -- cutting the federal-funds rate 13 times, to 3% from 7% -- the situation today is much trickier. Now, that rate is at 1.25%, leaving the Fed little room to cut rates again if the war runs into trouble or if the economy weakens further. Mr. Rosenberg notes the 12 interest-rate cuts for the current easing cycle haven't done much to revive the U.S. economy because business overcapacity, rather than prohibitively high rates, is responsible for the downturn.

A U.S. slowdown would be less of a worry if markets in other countries looked healthy. But as in 1991, that isn't the case. "The world wasn't helping much then, and it isn't helping much now," says Carl Weinberg, chief economist for High Frequency Economics in Valhalla, New York. "Actually, it's bit worse today."

He notes Europe's economy was slumping in 1991, too. But European governments were taking much more aggressive steps to stimulate their economies through fiscal and monetary policy, so that Germany and the U.K. enjoyed healthy rebounds by 1993. Moreover, Japan's economy, now moribund, was strong, growing at a rate of 5% during the first quarter of 1991, compared with essentially no growth expected today.

U.S. corporations are in the process of repairing their balance sheets by reducing debt. Even as many companies cut costs to the bone, the profit downturn is lasting much longer, and has been much deeper, than in 1991 because of an inability to raise prices following a long period of corporate overinvestment.

Borrowing by U.S. consumers is another concern. Household debt as a percentage of gross domestic product stands at a record 83%, compared with 64% in 1991. Lower interest rates today take some of the sting out of the debt load, but many analysts say the burden is greater this time around.

At the same time, the U.S. has moved from a current-account surplus for the first quarter of 1991 to a widening current-account deficit that amounts to about 5% of GDP. This increases U.S. dependency on foreign capital, but it suggests the dollar will continue to weaken, which discourages foreign investors from buying U.S. stocks.

As in the fourth quarter of 1990, oil prices have been rising and approached $40 a barrel this month. In the weeks following Kuwait's liberation, prices sank to around $20 as supply concerns eased. This time, oil has fallen to below $27, and analysts say there could be further declines when the conflict in Iraq is over, though not to the same levels seen in 1991 because circumstances have changed. Venezuela has yet to return to full production following its recent oil-workers strike, and many other suppliers are near their capacity for pumping oil. Refining companies and other large oil consumers face low stock inventories. Higher energy costs, of course, hit the bottom line of U.S. companies.

Friday's Market Activity

Hopes that the war could be decisive and short helped drive strength in a number of stocks and sectors in the U.S. market. Airlines were the top performers Friday, with Southwest Airlines up $1.04, or 7.3%, to $15.28 even though analysts point out that the majority of stocks in the group remain significantly below levels of 18 months ago and a short war doesn't necessarily remove the threat of a bankruptcy-law filing for some of these companies.

Walt Disney gained 1.60, or 9.3%, to 18.74 as market participants speculated a short war would ease concerns about visiting tourist spots such as Disney's theme parks. Strategists also see a short timeline for a war benefiting advertising revenue.

Disney and nearly all of the 30 members of the Dow industrials finished in the black for the day; the only decliner was SBC Communications.

Intuit slid 12.17, or 24%, to 38.72 on the Nasdaq after the tax-software company said it expects pro forma earnings of $1.30 to $1.35 a share for the fiscal year ending July 31, down from its February estimate of $1.38 to $1.42 a share.

State Street fell 4.39, or 11%, to 34.11 after the financial custodial firm warned first-quarter operating results will come in between 45 cents to 47 cents a share, short of the 54-cent projection from Wall Street analysts surveyed by Thomson First Call.

Bank of New York, weighed down by State Street's warning, dropped 22 cents, or 1%, to 22.20. Bear Stearns and Prudential Securities lowered their earnings-per-share estimates for the company on concerns that the bank, which derives most of its income from fees tied to behind-the-scenes business like clearing stock trades, will suffer from continuing difficult business conditions.

-- Shaheen Pasha

<a href=www.tuscaloosanews.com>Read more By GARRY MITCHELL Associated Press Writer March 23, 2003

Alabama's farm economy could grow at a moderate rate this year, thanks to better prices and higher productivity in some crops, agriculture experts say.

With spring planting picking up, there are factors that could alter that forecast: fuel costs, foul weather and drought threats and, as always, fluctuations in the U.S. economy.

Despite the unpredictable pressures, poultry growers in the state's largest farm industry produced more than 1 billion broilers in 2000 for the first time and have kept up that production pace, says Auburn University poultry expert Eugene Simpson.

He says the actual buyers' price to growers has not changed much, but poultry growers are improving their finances by refinancing mortgages using the record low interest rates.

Lisa Lake and husband Steve run S & L Farms in Cullman. She said they refinanced their mortgage on their four hen houses last year.

"We got a really good rate. We keep the same payment, but paid down the principal," she said.

Still, they must budget for higher fuel prices driven up by political upheavals in Iraq and Venezuela.

The Lakes have about 35,000 birds and run into high electricity bills keeping them cool in Alabama's summer heat.

"It's a little bit of a scary time for growers," she said, because the market is flooded with poultry.

Alabama's total farm receipts for 2001 totaled $4.25 billion, the most recent figures available from the government. That jumps to $4.83 billion when forestry is included.

"I think we will see moderate growth, say 2 to 4 percent," said agriculture economist Walt Prevatt at Auburn University, giving an outlook for the 2003 crop.

He noted that all of the top five commodities have some potential to improve in price and productivity this year. Broilers are 41.5 percent of total farm and forestry receipts; forestry is 14.9 percent; cattle and calves 7.5 percent; eggs 5.5 percent; and greenhouse and nursery crops 4.6 percent.

Cotton is number six at about 4.5 percent.

Cotton expert Bob Goodman, another Auburn economist, believes a U.S. war with Iraq will probably not have a lasting impact on cotton exports, "but we will see some drag on the cotton market until the situation stabilizes."

The outlook for cotton exports is improving, with the decline in the dollar, he said, because a weak dollar makes U.S. exports cheaper on the world market.

"We need to sell about two-thirds of our cotton overseas now, since most of the domestic market is out of business due to the lower labor costs of overseas competitors," he said. "I am positive about the farmer's chances for a profitable crop in 2003, for cotton and peanuts."

And he expects gains in peanut production in southwest Alabama.

"With the demise of the quota system, a large increase in peanut production has occurred in Baldwin, Escambia, Monroe and Mobile counties," he said.

Goodman expects this trend will continue for several reasons.

"There are some soybean producers there as well, and if the weather cooperates they should do OK, but there will not be a return to large acres of soybean production in Alabama for a very long time," he said.

Soybean prices are low right now, and will not sustain profitable production in most of the state.

Nationally, net farm income is expected to rebound this year, after a dramatic one-year, $13 billion decline in 2002, according to an economic report by the University of Missouri's Food and Agricultural Policy Research Institute, or FAPRI.

Prices for pork and beef are expected to rise until 2005, when reverses in the regular livestock cycles will bring price declines. Both hog and cattle prices are expected to end the decade at above current levels.

In Alabama, Prevatt said farm production costs will rise this year.

"I am hopeful they won't rise faster than gross revenue," he said. "When higher production costs are factored in, net farm income will probably be flat to a slight improvement. Now add in the farm bill payments to farmers and net farm income should show some improvement."

However, in comparison with other major farming states Alabama does not receive large levels of government payments, he said.

Also, if broiler production increases and improvements are realized for cattle and calf prices this year, this will likely give a boost to total farm receipts and net farm income, assuming production costs do not outpace improvements in revenue, according to Prevatt.

The USDA collects information from growers on their income each spring. Those surveys are currently being done. The report on planting intentions will come out March 31, giving the first hint of the 2003 crop size.

U.S. price projections for 2002-03 row crop marketing season are all improved over 2001-02, according to Herb Vanderberry of the Alabama Agricultural Statistics Service. Cattle, broiler, and egg prices are also projected higher for this year, he said.

"But until we have some idea of crop sizes and livestock production during '03, it would be anybody's guess on net farm income," he said.