NEW YORK: Stocks rallied strongly on Friday, lifting the blue-chip Dow to its best week in more than 20 years as investors found hope for a swift end to the Iraq war in a firestorm of missiles and bombs raining on Baghdad.
The Dow and Standard & Poor’s 500 Index posted their eighth straight day of gains.
Stocks rose at the open and leaped in late morning after a BBC report quoted a British official as saying Iraqi President Saddam Hussein was likely killed in the first air strike on Baghdad. Britain’s defence chief said he could not confirm the report.
Wall Street watched as the United States and Britain unleashed a devastating air assault on Baghdad and other cities while their ground forces thrust deep into Iraqi territory.
US Defence Secretary Donald Rumsfeld said the scale of the assault was intended to show Iraqis that Saddam was finished and his rule was “history.”
“This suggests there will be a more telescoped time frame for military conflict,” said David Littmann, chief economist at Comerican Bank in Detroit. “It suggests certainty will take over in the economy and consumer confidence will return.”
The Dow Jones industrials jumped 235.02 points, or 2.84%, to 8,521.62, based on the latest available data. The Standard and Poor’s 500 index rose 20.05 points, or 2.29%, to 895.89. The tech-laced Nasdaq Composite Index added 18.40 points, or 1.31%, at 1,421.17.
The Dow’s 8.36% rise for the week was the best since an 8.72% gain for the week ending Oct 8, 1982. The S&P is up 7.39% on the week. The Nasdaq added 6.03%.
The rally boosted the S&P 500 into positive territory by 1.8% and the Dow by 2.2% on the year, while the Nasdaq is up 6.4% for 2003.
The last eight straight days of gains for the Dow occurred in December 1998, while such a streak last happened for the S&P in June 1997.
Other world markets also responded sharply to the war news. The dollar jumped to two-month highs against major currencies, the 10-year Treasury note’s yield surged to a two-month high at 4.10%, gold fell to a three and a half -month low and oil slumped to its lowest level in nearly four months, below US$27 a barrel.
NYMEX prompt crude futures have now given up more than US$13 or 33% from the 12-year high of US$39.99 on Feb 27. Higher oil prices are an added cost to businesses, so the recent decline has cheered Wall Street.
Investors were glued to television sets flashing dramatic nighttime footage of the pounding, fireballs and all, which Washington says is aimed at ousting the Iraqi regime. Plumes of smoke rose from Baghdad as bombs and missiles slammed into one of Saddam’s palaces and other targets.
US and British forces swept through southern Iraq and seized airfields and oilfields.
“It’s a very uncomfortable feeling (watching the bombing of Baghdad). You pray that we’re doing the right thing. If it ends the war faster it will be positive,” said Ed White, senior vice president at Gannett Welsh & Kotler in Boston.
As the United States unleashed what it has dubbed its “shock and awe” air assault, some market watchers warned against excessive optimism that the fighting will be over quickly.
“While things continue to go well over there, we’re still a bit concerned, given we had such a long run-up,” said Kevin Connellan, head of equity trading at Northern Trust.
“Once the troops get closer to the cities over the weekend, the conflict could get tougher.”
Still, traders hoped stocks, after three down years, could finally be bouncing back.
“We were in purgatory for a long time and that was causing the market to just languish,” said W.J. Dowd Inc President Gordon Charlop, who works on the floor of the New York Stock Exchange.
Now, he added, “We are starting to get our swagger back.”
The war overshadowed the day's economic data.
The Consumer Price Index, a measure of retail level inflation, jumped 0.6% in February - its biggest gain in more than two years – as energy prices surged on the march to war and food costs jumped.
But the core CPI rose just 0.1%, showing inflation was well-contained when volatile food and energy costs were stripped out. - Reuters
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