US stocks fell this week, sending benchmark indexes to their biggest weekly declines since January, on concern the war in Iraq may drag on for months and delay any pickup in consumer and business spending.
Companies such as Hilton Hotels Corp, the third-largest US hotel company, blamed the conflict for lower-than-expected profit.
Shares of paper and chemical companies slumped as the price of crude oil soared 12 percent, raising manufacturing costs.
"The war going on will continue to be a depressant on the market," said George Boyd, who oversees US$18 billion as head of equities at Weiss Peck & Geer. "Everyone was expecting a short war."
The Standard & Poor's 500 Index dropped 3.6 percent to 863.50 for the week. The Dow Jones Industrial Average lost 4.4 percent to 8,145.77, with 28 of 30 members falling.
The NASDAQ Composite Index slipped 3.7 percent to 1,369.60. The S&P 500 and Dow posted their biggest weekly slides since the week ended Jan. 24 and the NASDAQ recorded its largest drop since the week ended Jan. 17.
The declines pared the gains of the previous week, when the Dow had its largest weekly advance in more than 20 years as the US launched its attack against Iraq and investors speculated the war would end quickly.
Stocks concluded the week with the first three-day losing streak for the S&P 500 in six weeks. White House spokesman Ari Fleischer said Americans should prepare for a long fight in Iraq.
US Defense Secretary Donald Rumsfeld said the military campaign in Iraq will grow increasingly dangerous for soldiers.
``We are at war; there are going to be setbacks,'' said Richard Lane, co-manager of the FMI Focus Fund, which has returned 13 percent annually the past five years versus a 2.7 percent annual drop in the S&P 500.
* The Standard & Poor's 500 Index dropped 3.6 percent to 863.50 for the week.
* The Dow Jones Industrial Average lost 4.4 percent to 8,145.77, with 28 of 30 members falling.
* The NASDAQ Composite Index slipped 3.7 percent to 1,369.60.
Investors should buy stocks when the Dow average falls below 8000 and sell stocks when it climbs above 9000, he said. "There are so many things going on in the world, I think we're going to bounce around for a while," said Lane. He recently bought shares of Young Broadcasting Inc, a television station owner, and JD Edwards & Co, which makes business software.
Consumers are staying home to watch war coverage rather than traveling or shopping, some investors say. Companies are delaying buying equipment until the Iraqi crisis has passed, they said.
Hilton Hotels said late Thursday it will earn less than expected this quarter and this year because the war has hurt demand for business and leisure travel. Ethan Allen Interiors Inc, a furniture retailer, also cited the Iraq conflict in lowering its fiscal third-quarter profit forecast. Hilton lost 9.1 percent and Ethan Allen dropped 6.7 percent.
Higher energy costs are also taking a toll on earnings.
Temple-Inland Inc, a maker of lumber and boxes, said it will have an unexpected loss this quarter because of higher energy prices. The stock fell 12 percent.
Dow Chemical Co., the largest US chemical maker, and International Paper Co, the world's largest paper company, fell 5.8 percent and 8.8 percent, respectively, for the week. Natural gas prices have averaged US$6 per British thermal units this quarter, almost twice as much as last year. Crude oil futures had their biggest rally in almost a year on the New York Mercantile Exchange.
Consumer-electronics retailers posted the biggest drop in the S&P 500. Best Buy Co, the No. 1 electronics retailer, dropped 14 percent this week and Circuit City Stores Inc slid 5.8 percent.
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