Tuesday, March 18, 2003

Prospect of short war boosts stocks for 4th day

By Amy Baldwin
The Associated Press
and The Cincinnati Enquirer

NEW YORK - The growing likelihood of war with Iraq sent stocks rallying for a fourth straight session Monday, as investors became confident the United States would prevail in a short-lived conflict.

The Dow Jones Industrial Average surged more than 280 points, catapulting itself to a four-day gain of more than 600 points.

"With (the Iraq) resolution at hand, investors returned to stocks across the board today," Peter A. Sorrentino, Bartlett & Co., Cincinnati, said.

Investors who had feared that war would threaten the economy are increasingly optimistic about the outcome of a conflict with Iraq.

"Stocks moved up sharply this morning and continued their advance throughout the day on heavy volume," Jim Russell, director of core equity strategy, Fifth Third Bank in Cincinnati, said. "That's a positive sign, but I think the market may be discounting a swift end to any military conflict, and that's far from certain at this point."

A brief war "allows businesses to stop waiting and watching and get back to spending and hiring. And it allows consumers to get back to spending. ... (It) should put the shaky (economic) recovery back on more solid footing," said Joseph Keating, chief investment officer at AmSouth Asset Management in Birmingham, Ala.

However, analysts say stocks can't sustain a meaningful advance until the situation with Iraq becomes more clear.

The Dow was up 282.21, or 3.6 percent, at 8141.92. The Dow has climbed 617.86 in four days, allowing it Monday to close above the 8,000 level for the first time in nearly a month.

The broader market also rallied sharply higher. The Nasdaq Composite Index jumped 51.94, or 3.9 percent, to 1,392.27. The Standard & Poor's 500 index rose 29.52, or 3.5 percent, to 862.79.

While war worries have depressed the market for months, investors in recent sessions have been buying on the belief that there will be a rally after a war begins. That has been the market's pattern in past conflicts, including the Gulf War in 1991.

"We are getting closer and closer to some sort of conclusive event, and people are trying to position themselves for that," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray.

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