Stocks ended near session lows Wednesday, as major indexes appeared to be heading for a third consecutive losing month. Geopolitical tension again loomed, and stocks received additional pressure from disappoing quarterly results from Hewlett-Packard (HPQ ).
The Dow Jones industrial average was down 103.22 points, or 1.31%, to 7,806.28. The broader Standard & Poor's 500-stock index dropped 11.06 points, or 1.32%, to 827.51. Meanwhile, the tech-laden Nasdaq composite index lost 25.31 points, or 1.9%, to 1,303.67.
On Wednesday, chief U.N. weapons inspector Hans Blix said Iraq had not made a "fundamental decision to disarm" and was not yet fully cooperating with inspections. Tensions over possible war in Iraq were exacerbated by political brinksmanship by North Korea -- highlighted by Tuesday's test missile launch into the Sea of Japan.
Wednesday night, President Bush was expected to deliver a speech outlining how war in Iraq could result in a more democratized Middle East region.
After Tuesday's closing bell, Hewlett-Packard reported first quarter earnings of 24 cents per share, vs. 13 cents the previous year. Still, the company's revenue numbers were below expectations. Shares in H-P dropped more than 15% Wednesday.
H-P's troubles weighed down other technology bellwethers Intel (INTC ) and Microsoft (MSFT ). Shares in both Dow components fell Wednesday.
Hotel operator Host Marriott (HMT ) posted a fourth quarter loss of 4 cents per share, down from last year's loss of 12 cents per share. But the largest hotel owner in the U.S. offered a glum outlook for 2003, citing a struggling economy and fears of war.
Semtech (SMTC ) saw its shares jump 8.88% Wednesday after the semiconductor maker beat Wall Street's earnings estimates for the fourth quarter.
More earnings reports were expected Thursday, including: telecommunications company Broadwing (BRW ), cable provider Comcast (CMCSA ), retailer The Gap (GPS ), and energy company PG&E (PCG ).
Embattled Dutch grocer Royal Ahold (AHO ) said Wednesday that the Securities and Exchange Commission and the U.S. Attorney General's Office were investigating the company, which revealed accounting errors on Monday. Shares in Ahold, which operates Giant and Stop & Shop stores in the U.S., continued a drastic slide on Wednesday. Since Monday, Ahold's stock price has dropped about 70%.
Two former Kmart (KMRTQ ) executives were indicted by the federal prosecutors and sued by the SEC Wednesday, for $42 million in alleged accounting fraud.
In commodities news, oil prices surged Wednesday after the government said fuel inventories dropped owing to cold weather in parts of the U.S. Prices had moved higher on fears that war with Iraq could disrupt supply and on an extended strike in Venezuela.
Prices of U.S. Treasuries moved higher Wednesday afternoon, as stocks fell further into the red. The benchmark 10-year note's yield was 3.77%. Meanwhile, the Treasury's sale of $27 billion in two-year notes was well-received, signaling a continued safe-haven demand in the market.
There were no significant economic reports Wednesday. Thursday's session brings January data on durable goods orders and new home sales, as well as initial jobless claims for the week ended Feb. 22.
European markets closed lower. In London, the FTSE 100 index was down 28.2 points, or 0.78%, to 3,593.3. In Paris, the CAC 40 index lost 24.8 points, or 0.92%, to 2,658.57. In Frankfurt, the DAX index fell 35.3 points, or 1.42%, to 2,450.2.
In Asia, stocks ended lower. In Japan, the Nikkei 225 index fell 3.68 points, or 0.04%, to close at 8,356.81. Hong Kong's benchmark Hang Seng index fell 32.2 points, or 0.35%, to close at 9,116.28.