US stocks rallied, sending the Dow Jones Industrial Average to its biggest weekly gain in more than 20 years, as the US and UK attacked Baghdad by air and their ground troops moved into southern Iraq.
"The market has become a bellwether for success or disappointment in the Iraqi war," Henry Cavanna, who has worked on Wall Street for more than three decades and now runs Cavanna Capital Management, told Bloomberg Television. "This stock market is not a normal stock market right now. It's in a zone that's totally driven by one event."
The Dow rose 235.37, or 2.8 percent, to 8,521.97. Every member of the 30-stock average gained except SBC Communications Inc. The S&P 500 advanced 20.23, or 2.3 percent, to 895.90, led by General Electric Co and Pfizer Inc. The Dow and S&P 500 climbed for an eighth day and turned higher for the year.
PHOTO: AP
The NASDAQ Composite Index added 19.07, or 1.4 percent, to 1,421.84.
For the week, the Dow climbed 8.4 percent, its largest gain since the five days ended Oct. 8, 1982. The S&P 500 rose 7.5 percent for the week, while the NASDAQ added 6 percent.
Year-to-date, the Dow has risen 2.2 percent and the S&P 500 has added 1.8 percent amid optimism the war will end in days or weeks and spark a recovery in consumer and business spending.
The NASDAQ has gained 6.5 percent.
"There is a prevailing thought process that the only thing sitting on the US economy is this war," said Matt Johnson, head of trading at Lehman Brothers Inc.
Stocks jumped after the BBC reported, citing a UK official, that Iraqi leader Saddam Hussein may have been killed. Admiral Sir Michael Boyce, the UK's chief of defense staff, said he's "not aware" whether Hussein was killed in initial air strikes on Baghdad.
Allied troops may be in Baghdad in three or four days, the BBC said, citing an unidentified UK military official. Allied ground troops pushed through southern Iraq in two broad columns.
One seized the region's oilfields and moved toward Basra, the second-largest city; the other headed toward Baghdad. Forty-five of the targets were homes or compounds thought to house Iraqi leaders and security forces, NBC News reported.
"There's relief so far that nothing really unexpected has happened in Iraq," said Eric Thorne, who helps manage US$1.7 billion at Bryn Mawr Trust Co in Philadelphia. "Everything is going according to plan."
He recently trimmed his position in diaper maker Kimberly-Clark Corp and is considering buying shares of Cisco Systems Inc, the largest maker of computer-networking equipment, and technology companies.
More than two stocks rose for every one that fell on the New York Stock Exchange while three advanced for every two that declined on the NASDAQ Stock Market.
About 1.81 billion shares traded on the Big Board, the most since Nov. 21, as trading increased amid the quarterly expiration of options on stocks and stock indexes, and of futures on stocks and stock indexes.
General Electric, the world's second most-valuable company after Microsoft Corp climbed US$1.15 to US$28. Pfizer, the world's biggest drugmaker, added US$1.16 to US$31.96.
General Electric, which owns the NBC television network, and other media companies gained on optimism a short war wouldn't disrupt advertising revenue as much as some investors had expected, said Jeffrey Logsdon, analyst at Gerard Klauer Mattison & Co.
Walt Disney Co, the second-largest US media company and owner of the ABC network, jumped US$1.60 to US$18.74. Viacom Inc, owner of CBS television, rose US$0.77 to US$41.61.
Micron Technology Inc rallied US$0.88 to US$8.88. The world's second-biggest maker of computer-memory chips said sales rose 22 percent in the second quarter and topped the average estimate of analysts surveyed by Thomson Financial. Still, Micron's loss widened because of the cost of job cuts and inventory writedowns.
The eight-day rally has lifted the Dow 13.3 percent and the S&P 500 11.9 percent. For the Dow it is the longest winning streak since December 1998; for the S&P 500 it's the longest since June 1997.
Based on changes in the Wilshire 5000 Total Market Index, the broadest measure of US shares, the market value of US stocks has grown by US$1 trillion during that time.
Optimism that the attack on Iraq would succeed in days or weeks has fueled the advance. For much the same reason, crude oil for May delivery has fallen 24 percent, to US$26.91, during the past eight days in New York trading; two-year Treasury note yields have risen 41 basis points, to 1.78 percent; and the euro has fallen 4.6 percent against the dollar, to US$1.0533.
Electronic Data Systems Corp climbed US$1.87 to US$17.63 after ousting Chief Executive Officer Richard Brown. Under Brown, the world's second-largest computer-services company cut profit forecasts three times last year and the stock lost more than half its value since September. Michael Jordan, a former CBS Corp CEO, will replace him.
Technology stocks have outperformed the broader market on expectations the companies will be among the first beneficiaries of an economic recovery.
The NASDAQ-100 Index, dominated by computer-related companies, has risen 11 percent this year.
DuPont Co rose US$2.04 to US$41.64. The second-biggest US chemical maker said first-quarter profit will be at least US$0.55 a share, before certain costs. The average estimate of analysts surveyed by Thomson Financial was US$0.52.
Intuit Inc was the biggest drag on the S&P 500, losing US$12.17 to US$38.72. The company, the world's biggest maker of software used to prepare income-tax returns, cut its sales and profit forecasts for this quarter and the year. It said the slumping economy hurt its main sales season.
State Street Corp, the world's largest custodian of financial assets, tumbled US$4.39 to US$34.11 after trimming its profit forecast. State Street said first-quarter earnings per share will fall by about 50 percent as stock prices drop and global investing slows.
Other trust banks declined following State Street's announcement. Northern Trust Corp lost US$1.45 to US$31.71 and Bank of New York Co declined 22 cents to US$22.20.
Adobe Systems Inc slumped US$2 to US$32.07. WR Hambrecht + Co analyst William Lennan downgraded the stock to "hold" from "buy" because the stock is too expensive after it rallied 28 percent this year versus the S&P 500 Systems Software Index's 2.9 percent advance. He recommended prospective buyers to wait until the stock falls below US$29.
Palm Inc, the world's biggest maker of handheld computers, slipped US$0.44 to US$10.45. The company reported a US$172.3 million loss in the third quarter as it fired workers and sales dropped for a second period.
S&P 500 futures expiring in June rose 18.25 to 893 on the Chicago Mercantile Exchange. June futures on the NASDAQ-100 advanced 13.50 to 1095. The index, a benchmark for NASDAQ's largest companies, gained 12.81, or 1.2 percent, to 1,093.05.
NASDAQ-100 tracking shares, called Cubes because of their QQQ ticker symbol, rose US$0.37 to US$27.17. The S&P 500 shares known as Spiders gained US$1.52 to US$89.67.
The Russell 2000 Index of smaller stocks advanced 5.74, or 1.6 percent, to 376.23. The Wilshire 5000 added 178.78, or 2.2 percent, to 8,463.37. Based on the Wilshire's change, the total value of US stocks rose by US$214.54 billion.
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