Stocks fall despite somewhat encouraging employment news
NEW YORK— Investors brushed aside a better-than-expected employment report Friday, sending stocks to their fourth straight weekly decline as fears of war and terrorism again fed worries about the nation's economic outlook.
"As encouraging as that report was, there is still an air of uncertainty about what's going to happen in the Middle East and whether this economy has enough horsepower to deliver decent earnings growth in 2003," said Charles G. Crane, strategist for Victory SBSF Capital Management.
The Dow Jones industrial average fell 65.07, or 0.8 percent, to close at 7,864.23, for a four-day loss of 245 points. It was the lowest close since Oct. 11, when blue chip stocks finished at 7,850.29.
The broader market also finished lower. The Nasdaq composite index slid 19.26, or 1.5 percent, to 1,282.47, the lowest close since Oct. 17. The Standard & Poor's 500 index dropped 8.46, or 1 percent, to 829.69, the lowest finish since Oct. 10.
The three main gauges also posted their fourth straight losing week, a streak not seen since the period ended Oct. 4. For the week, the Dow fell 2.4 percent, the Nasdaq dropped 2.9 percent and the S&P 500 lost 3 percent.
The Labor Department's news lifted blue chip stocks as much as 71 points in early trading, but investors then turned hesitant about buying due to the continuing threat of war.
Terrorism concerns also pressured the market. The Bush administration raised the national terror alert from yellow to orange, citing a U.S. intelligence warning of a high risk of terrorist attack. The highest alert level is red.
Analysts say investors' worries about a war with Iraq and tensions with North Korea have been weighing heavily on the market, leading to a heavy selloff in the past month despite generally encouraging economic and earnings news.
President Bush said late Thursday the "game is over" for Saddam Hussein and said the United Nations should not permit itself to be "mocked by a dictator," in a sign that war with Iraq is approaching.
"It's the pervasive uncertainty concerning the likely war," said Tracy Herrick, chief investment strategist at Jefferies & Co., referring to investors' reluctance to buy stocks despite positive economic reports.
"We'll have to see a resolution in that before any good news is going to be permanent," he said.
Johnson & Johnson dropped 28 cents to $51.84 after The Wall Street Journal reported the health care company was in discussions to buy biotech firm Scios for about $2 billion. Scios jumped $7.51 to $42.20.
Pixar Animation Studios declined $2.72 to $51.70 after posting quarterly profits that beat estimates and saying it might not continue its existing movie distribution deal with Walt Disney Co.
Winners included Cigna, which jumped $3.80 to $43.02, after the health insurer reported fourth-quarter operating earnings that beat analysts' expectations by 7 cents a share.
Electronic Data Systems rose 78 cents to $16.49 despite warning that its first-quarter and full-year earnings would fall short of Wall Street's estimates.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Volume was very light at 1.25 billion shares, compared with 1.41 billion traded Thursday.
The Russell 2000 index, which tracks smaller company stocks, dropped 5.96, or 1.6 percent, to 358.78.