Iraq, oil price rise send stocks down

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NEW YORK (AP) -- Stocks slumped in listless trading yesterday amid concerns about the upcoming Iraqi election and rising oil prices. The major indexes closed at their lowest levels of the year.

Market watchers were growing increasingly concerned about January's slide in stocks, which some analysts blamed on Wall Street's strong fourth-quarter performance.

A car bomb attack in Baghdad, targeting the prime minister's party headquarters, did little to ease the anxiety of investors ahead of Iraq's Sunday election. Oil prices declined early in the day, but settled up 28 cents at $48.81 per barrel on the New York Mercantile Exchange.

"In general, the market is waiting for the elections in Iraq," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "And oil prices have been on the move up for the past week."

The Dow Jones industrials moved in and out of positive range through much of the day, closing down 24.38, or 0.23 percent, at 10,368.61.

Broader stock indicators also sagged. The Standard & Poor's 500 index fell 4.12, or 0.35 percent, to 1,163.75. The Nasdaq Composite Index dropped 25.57, or 1.26 percent, to 2,008.70.

Investors in the technology-heavy Nasdaq, which is down 7.66 percent year-to-date, may have been unsettled when chip-making giant Infineon Technologies AG warned that second-quarter earnings could slow. The German company reported that first-quarter net profits quadrupled as a result of one-time license income.

The Infineon report "is probably part" of the Nasdaq's malaise, said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.

Investors also continued to eye quarterly earnings results. This week's calendar of releases includes 10 of the 30 Dow industrials, along with more than 150 other major companies.

Among yesterday's gainers, Dow component American Express Co. rose 67 cents to $52.60 after reporting fourth-quarter earnings of $896 million, or 71 cents a share -- a penny ahead of analysts' estimates. The financial services company's earnings surged 17 percent as a result of record card-member spending, higher average card-member lending balances and strong travel sales.

Microsoft Corp., another Dow component, gained 2 cents to $25.67 after the Redmond, Wash., software company announced in Belgium that it will not appeal an interim European Union ruling forcing it to strip Media Player from its Windows platform.

Procter & Gamble Co. fell 44 cents to $55.21 after UBS downgraded the stock to "neutral" from "buy" on its recent price rise. While the 2005 outlook for P&G remains strong, the Cincinnati consumer products company's good health is already factored into its price.

Polo Ralph Lauren Corp. also dropped, shedding 2.7 percent, or $1.08, to $39.03, after Merrill Lynch downgraded it to a "neutral" from a "buy," saying investor expectations might be a bit high. Meanwhile, shares of Liz Claiborne Inc. rose 2.3 percent, or 92 cents, to $40.70, after Merrill raised its rating from a "neutral" to a "buy."

Wendy's International Inc. lost 42 cents to $37.33 after CIBC World Markets downgraded the fast-food company to "sector perform" from "sector outperform." CIBC's upgrade of McDonald's Corp. sent its shares up 49 cents to $31.74. CIBC said Wendy's faces a more difficult competitive environment in 2005, including greater competition from McDonald's in premium products.

Declining shares outnumbered advancers by more than 3 to 2 on the New York Stock Exchange. Preliminary consolidated volume came to 1.89 billion shares, compared with 2.04 billion traded Friday.

The Russell 2000 index of smaller companies slipped 6.55, or 1.07 percent, to 604.53.

Overseas, Japan's Nikkei stock average rose 0.45 percent. Britain's FTSE 100 advanced 0.19 percent, Germany's DAX index was off 0.28 percent, and France's CAC-40 fell 0.14 percent.