Steve Quayle News Alerts

January 27, 2003

NEW YORK — Stocks fell sharply Monday, with the blue-chip Dow tumbling below 8,000 for the first time since Oct. 15, as chief U.N. arms inspector Hans Blix said Iraq cooperated in providing inspectors with access but seems "not to have genuinely accepted disarmament demands."

In midday trading Monday, the blue-chip Dow Jones industrial average was down 155 points at 7,975 while the technology-packed Nasdaq Composite Index was down 18 points at 1,323. The broader Standard & Poor's 500 Index was down 15 points at 843.

"There is a dark cloud hovering over the market," said Burton Schlichter, senior market analyst at Lind-Waldock & Co., a division of Refco LLC.

"The markets are experiencing extreme volatility," said John Person, head financial analyst at Infinity Brokerage Services. "U.N. inspectors will probably get the time which delays the inevitable action and further undermines the confidence of the U.S. ability to follow through with invading Iraq."

The U.N. report comes a day before President Bush's State of the Union speech, in which Bush will try to rebuild foreign support for a potential war on Iraq as well as answer growing doubts from the U.S. public.

European shares sank toward their lowest levels in nearly six years, and the dollar skidded to three-year lows against the euro. Prices for safe-haven gold bullion spiked above $370 per ounce for the first time in six years, and strong oil prices held their ground.

This week is one of the busiest of the fourth-quarter earnings season, but corporate scorecards are taking a backseat during a week packed with headline events. President Bush will make his case against Iraq in his State of the Union address on Tuesday, and the Fed Open Market Committee meets on Tuesday and Wednesday to discuss monetary policy.

In his State of the Union speech on Tuesday, Bush will try to rebuild foreign support for a potential war on Iraq as well as answer growing doubts from the U.S. public.

All signs earlier in January had pointed to this week being decisive in the march toward possible war with Iraq. But domestic and foreign pressures have mounted on Bush to avoid an early decision and give more time to U.N. inspectors searching Iraq for biological, chemical and nuclear weapons.

The two-day Federal Reserve policy meeting is not expected to result in an interest rate cut, but a poll of primary dealers by Reuters found a few dealers thought the Fed might recognize increased risks to the economy in its statement.

Freddie Mac, the No. 2 U.S. mortgage finance company, dropped $1.21 to $57.90. The company said it would not provide a 2003 earnings forecast or an interest margin outlook amid a cloudy business environment.

Johnson & Johnson dipped $1.57 to $52.04, weighing on the Dow. The drug giant said it will take a charge against fourth-quarter earnings after being ordered to reimburse Amgen Inc. for attorneys' fees and costs related to a licensing dispute.

Tyson Foods Inc), the world's largest meat company, sank $1.02 to $10.47. The company said quarterly earnings fell sharply, hurt by high grain prices as well as low meat prices due to oversupply

Declining issues outnumbered advancers nearly 3 to 1 on the New York Stock Exchange where trading volume was light.

The Russell 2000 index, which tracks smaller company stocks, fell 4.20, or 1.1 percent, to 370.86.

Overseas, Japan's Nikkei stock average finished Monday down 1.4 percent. In Europe, France's CAC-40 slid 3.6 percent, Britain's FTSE 100 dropped 3.4 percent and Germany's DAX index lost 3 percent.

Reuters and the Associated Press contributed to this report.
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