Stocks Vault Higher as Baghdad Battle Looms
Stocks finished Wednesday with big gains as investors viewed the advance of U.S.-led troops to Baghdad as a sign that the Iraq war is nearing a conclusion.
On Wednesday, coalition forces took control of a strategically important bridge over the Tigris River. And a key division of Iraq's Republican Guard was "destroyed," a U.S. general said. The troops are said to be 30 miles away from the city.
The major indexes Wednesday added substantial gains to Tuesday's modest advance. The Dow Jones industrial average climbed 215.20 points, or 2.67%, to 8,285.06. The broader Standard & Poor's 500-stock index added 22.42 points, or 2.61%, to 880.90. Meanwhile, the tech-heavy Nasdaq composite index gained 48.41 points, or 3.59%, to 1,396.71.
War news will remain the main driver of the markets. Though capturing Baghdad would be important, investors will still have to contend with ugly headlines. Upon rescue of an American prisoner of war at an Iraqi hospital, eleven bodies were found. Also, Pentagon officials caution that the most difficult fighting is ahead and high temperatures in the region are another obstacle. And Saddam Hussein's whereabouts are still unknown.
Increasingly, markets are taking into account the impact of the SARS viral infection. Scientists have yet to determine how the deadly virus is spread. Meantime, over 2,000 cases have been confirmed throughout Asia and beyond.
As the upcoming battle in Baghdad becomes the focus of attention, investors may show little reaction to an update on initial jobless claims due Thursday. Claims are expected to edge 3,000 higher to 405,000 in the week ended March 29. The data will offer a read on the flailing job market.
Among earnings reports Wednesday, electronics retailer Circuit City (CC ) posted sharply lower quarterly profit, before charges, citing lower consumer spending ahead of war with Iraq. Its earnings per share fell by nearly half to 36 cents.
After the close Wednesday, home goods retailer Bed Bath and Beyond (BBBY ) provided a more positive view. It said its net earnings rose 27.4% in the fourth quarter, with comparable store sales up 4.1%. The retailer beat analysts' earnings per share expectations by 2 cents.
Crude oil prices extended their recent decline after the release of data showing that OPEC pumped 1.77 million barrels per day over quota in March.
Treasuries finished lower in price as Allied forces progressed toward Baghdad, hurting the safe haven argument for government bonds.
On the economic data front, factory orders fell 1.5% in February after a revised 1.7% gain in January. Shipments fell 1.5% as well following a revised 1.9% gain in January. The data were well presaged by the durable goods report and will have no impact on the markets, which are focused on the advance on Baghdad.
European markets finished higher on hopes that the fighting in Iraq may be nearing an end. In London, the Financial Times-Stock Exchange 100 index finished up 68.80 points, or 1.86%, to 3,753.40. In Germany, the DAX gained 139.16 points, or 5.68%, to 2,589.35. In France, the CAC 40 Index finished up 108.84 points, or 4.13% to 2,743.88.
Asia markets finished higher. In Tokyo, the Nikkei 225 index gained 83.13 points, or 1.04%, to close at 8,069.85. In Hong Kong, the benchmark Hang Seng index tacked on 109.30 points, or 1.27%, to close at 8,706.19.