NEW YORK: Stocks closed slightly higher on Friday, as a March 17 deadline for Iraq to meet disarmament demands or face war fed investor hopes for resolution to a crisis that has depressed markets for months.
On a see-saw day, dismal jobs data sent market gauges sharply lower at the open before reports suggesting the United States was closing in on al-Qaeda leader Osama bin Laden lifted stocks to hover around the unchanged mark.
Wall Street also kept an eye on a tense meeting at the United Nations Security Council, where the United States, Britain and Spain delivered the March 17 ultimatum a day after President George W. Bush had vowed to go to war against Iraq, with or without UN approval, if Baghdad did not disarm.
“The war could start in a week or two, it could be over in a week or two and the situation in the Middle East could get more calm,” said Alfred Kugel, senior investment strategist at Stein Roe Investment Counsel in Chicago, adding that investors “don’t like uncertainty.”
Traders also said short-covering fuelled the market’s rise. Short sellers – investors who sold borrowed stock and hoped to buy it back later at a lower price – covered their short positions by buying shares as the market began to climb.
The blue-chip Dow Jones industrial average ended up 0.86%, or 66.04 points, at 7,740.03, according to the latest available figures.
The broader Standard & Poor’s 500 Index rose 6.79 points, or 0.83%, to 828.89.
The Nasdaq Composite Index reversed earlier losses and ended up 0.18%, or 2.40 points, at 1,305.29.
Volume on the NYSE was active, with about 1.37 billion shares trading hands. Advancing shares outnumbered decliners by a ratio of 9 to 7.
On the Nasdaq, where volume totalled roughly 1.42 billion, decliners outnumbered advancers 8 to 7.
Stocks opened sharply lower and then came back to hover around break-even for most of the session, as investors weighed dismal jobs data against reports that the United States might have a lead on Osama and that two of his sons had been captured. The White House later cast doubt on the reports.
“You had a big reversal in the market. There’s a lot of cross-currents going on today,” said David Memmott, head of listed block trading at Morgan Stanley.
Still, markets ended the week in the red. The Dow ended the week down 1.91%, the Standard & Poor’s 500 Index fell 2.41%, while the Nasdaq ended down 1.46%. The Dow is down almost 8% this year.
UN arms inspector Hans Blix told the Security Council that Iraq had recently made some progress in disarmament, potentially bolstering opposition to a US-led drive to gain the council’s backing for war.
Prospects that the March 17 ultimatum would pass seemed slim. France rejected the ultimatum, and China and Russia said they opposed war.
Any of the three countries can kill the resolution by using their veto power.
Earlier, traders pinned the market’s rally on an ABC News report that the CIA and Pakistani Army were tracking a large caravan of people in Pakistan that may include Osama.
In other reports, a Pakistani official said Osama’s sons were wounded and possibly arrested in an operation in Afghanistan that killed at least nine suspected al-Qaeda members. The White House said it could not substantiate the reports about the sons.
Semiconductor stocks fell after Intel on Thursday said its first-quarter revenue will be flat to down slightly from a year earlier, due to weaker than expected sales of flash memory chips.
Intel ended down 69 cents, or 4.13%, at US$16.01, while the Philadelphia semiconductor index gave up 0.51%.
Shares of 3Com Corp sank 8.69%, or 39 cents, to US$4.11, after the network equipment maker cut its revenue forecast for its fiscal third quarter, citing weak demand in North America.
Shares of General Electric Co, the Big Board’s most actively traded issue, ended up 1.46%, or 35 cents, at US$24.30.
Its chairman, Jeff Immelt, said in a letter to shareholders on Friday that GE plans to invest money in six fledgling businesses, including Hispanic broadcasting and US consumer finance, that can generate US$1bil in operating profit each over the next few years.
In the latest economic news, the number of workers on US payrolls outside the farm sector shrank 308,000 in February, its biggest decline since November 2001 and well short of economists’ estimate of a gain of 8,000.
The unemployment rate in February crept up to 5.8% from 5.7% in January, according to the Labour Department. – Reuters