U.S. stocks rise after reports of Iraqi uprising
Tuesday March 25, 4:32 pm ET
By Denise Duclaux
(Updates to close)
NEW YORK, March 25 (Reuters) - Stocks climbed on Tuesday as reports of an uprising against Saddam Hussein's forces buoyed investor sentiment a day after the market posted the year's biggest losses on worries over the war's progress.
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Reports an uprising may have started in the southern Iraqi city of Basra sparked a rally shortly after midday. Iraq's information minister denied the reports, but a British military official said early signs suggest an uprising may be under way. "We will be very keen to capitalize on it," he added.
"The news in Basra that there had been a revolt against the Iraq forces there really cheered people a lot," said Brian Pears, head of equity trading at Victory Capital Management. "It definitely brought things back more to a middle ground in terms of our feelings about the war."
The market rally lost some of its luster later after the U.S. Senate, driven by concerns about the cost of war, unexpectedly reversed course and voted to cut President George W. Bush's proposed $726 billion tax cut plan to about $350 billion.
The blue-chip Dow Jones industrials (CBOT:^DJI - News) ended up 65.55 points, or 0.80 percent, at 8,280.23, after jumping almost 1.5 percent earlier. The tech-laced Nasdaq Composite (NasdaqSC:^IXIC - News) was up 21.23 points, or 1.55 percent, at 1,391.01, after an earlier rise of more than 2.2 percent. The broad Standard and Poor's 500 (^GSPC - News) added 10.51 points, or 1.22 percent, to 874.74.
"We are a headline-driven market," said Arthur Hogan, chief market analyst at Jefferies & Co, as the market bounced throughout the session.
Investors are scouring headlines out of Iraq on how and when the U.S.-led war will end. Stocks sank more than 3 percent on Monday, snapping an eight-day streak of gains that pushed the Dow 13 percent higher as grim footage over the weekend reminded investors the war may be longer than some had hoped.
"The war headlines are starting to get a little more positive and after the shock from what occurred on Sunday, traders are now obviously recognizing, as awful as it is, deaths are part of the equation," said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access.
Traders said comments from Bush also helped lift sentiment earlier in the day. Bush said U.S. and British troops were making progress as they neared Baghdad. "Our coalition is on a steady advance," he said. "We cannot know the duration of this war, yet, we know its outcome."
Advancing stocks beat out decliners by a ratio of about 12 to 5 on the New York Stock Exchange (News - Websites) and about 2 to 1 on Nasdaq. More than 1.33 billion shares changed hands on the Big Board and more than 1.39 billion on Nasdaq in moderate trading.
AIRLINES MAKE A COMEBACK
Major U.S. airlines surged after Senate Majority Leader Bill Frist said he expected Congress to pass aid for the aviation industry, fueling hopes that some major carriers might be able to avoid bankruptcy.
The S&P Airlines index (^GSPALI - News) climbed 4.88 percent, after tumbling on Monday on fears the war will keep vacationers at home. Delta Air Lines (NYSE:DAL - News) rallied 29 cents, or 3.1 percent, to $9.81. Southwest Airlines (NYSE:LUV - News) tacked on 73 cents, or 5.1 percent, to $15.12.
Symantec Corp. (NasdaqNM:SYMC - News), a computer security and services provider, rose $1.66 to $40.75, or 4.3 percent. Standard & Poor's said Symantec will replace money lender Household International Inc. (NYSE:HI - News) in the S&P 500 Index after the close of trading on March 28.
Freight carrier Airborne Inc. (NYSE:ABF - News) climbed $1.82, or 10.1 percent, to $19.87. Germany's Deutsche Post sealed a deal to buy the ground delivery operations of Airborne for $1.05 billion, positioning its DHL courier unit to tackle the top U.S. package shippers.
AFC Enterprises Inc. (NasdaqNM:AFCE - News), operator of the Popeye's Chicken & Biscuits and Cinnabon fast-food chains, tumbled $3.70, or 21.6 percent, to $13.40 after it said it would restate most of its 2001 and 2002 results.
UnumProvident Corp. (NYSE:UNM - News) surged $1.58, or almost 19 percent, to $9.91. The leading disability insurer resolved issues with U.S. securities regulators by restating its financial results, with the outcome not as bad as expected.
Investors found new data on consumer confidence and the housing sector weak but not as bad as they had feared, traders said. U.S. consumer confidence took another hit in March as Americans' anxiety mounted during the run-up to war, according to a survey taken before the start of hostilities. Sales of existing U.S. homes fell in February from a record rate in January.
"Existing home sales continue to hang in there, consumer confidence was low but not as low as people thought it would be," said Chris Tucker, head trader at HSBC Securities. "So things remain difficult but not as bad as people had been expecting."
(With additional reporting by Herb Lash) |
