US stocks tumbled, sending the Standard & Poor's 500 Index to its biggest decline in four months, amid concern that the US may soon attack Iraq even in the face of opposition from some allies.
American International Group Inc, the largest insurer, sank after a Morgan Stanley analyst said the company will be hurt by weakness in the economy. Benchmark indexes recorded a second straight week of losses.
"Earnings are coming in in-line or slightly better than expected, but it doesn't matter because the overhang with the war in Iraq is the biggest wild card," said James Gribbell, who manages US$1.5 billion at David L. Babson & Co in Cambridge, Massachusetts.
The S&P 500 fell 25.94, or 2.9 percent, to 861.40. Financial stocks accounted for a quarter of the loss, the index's largest since Sept. 27. The Dow Jones Industrial Average dropped 238.46, or 2.9 percent, to 8,131.01. All 30 members of the average declined. The NASDAQ Composite Index shed 46.13, or 3.3 percent, to 1,342.14.
For the week, the S&P 500 lost 4.5 percent, the most since the week ended Sept. 20. The Dow shed 5.3 percent, its biggest weekly drop since the five days ended July 19. This week's losses wiped out year-to-date gains for both, leaving the S&P 500 down 2.1 percent this year and the Dow 2.5 percent lower this year.
The NASDAQ declined 2.5 percent this week, paring its 2003 advance to 0.5 percent.
"People are very skittish," said Brian Pears, head of trading at Victory Capital Management, which oversees US$70 billion.
"Portfolio managers are saying, `I don't see the next positive catalyst, but I see plenty of negative catalysts.' The reasons to be cautious are smacking me in the face every day."
Almost three stocks fell for every one that rose on the New York Stock Exchange. Some 1.54 billion shares traded on the NYSE, 13 percent more than the three-month daily average.
American International fell US$4.89, or 8 percent, to US$56.04, its biggest drop since July. Morgan Stanley's Alice Schroeder, the top-ranked property casualty analyst in Institutional Investor magazine's 2002 survey of money managers, cut the largest insurer to "equal weight" from "overweight." Schroeder lowered the industry to ``in line,'' reducing seven companies, including Marsh & McLennan Cos, XL Capital Ltd. and Allstate Corp. She cited the weak economy and a peak in commercial pricing.
Marsh & McLennan, the world's biggest insurance broker, slid US$2.39 to US$42.15; XL Capital, a Bermuda-based business insurer, fell US$3.35 to US$76.90; and Allstate, the No.2 US car insurer, slipped US$1.27 to US$34.29.
Fourth-quarter profit has climbed 8.4 percent, based on the 217 companies in the S&P 500 that have reported results, according to Thomson First Call. Analysts forecast 12 percent earnings growth for all index members.
While companies such as Texas Instruments Inc. and PeopleSoft Inc have reported profit that beat analysts' predictions, or forecast better-than-expected results, Eli Lilly & Co, Eastman Kodak Co and DuPont Co have posted results that disappointed investors.
KLA-Tencor Corp slid US$1.95 to US$34.46. The world's biggest maker of semiconductor-inspection equipment said second-quarter net income fell to US$29.2 million from US$49 million a year ago. The company said orders this quarter will be the same as last quarter.
Broadcom Corp fell US$2.50 to US$15.11. The largest maker of cable-modem chips said its fourth-quarter loss widened to US$6.40 a share from US$1.27 a year earlier. Chief Executive Henry Nicholas resigned for family reasons, the company said.
Internet Security Systems Inc tumbled US$6.17 to US$14.20. The software maker reported sales that missed analysts' expectations and said revenue will increase less than earnings this year.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
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