US stocks fall after Bush speech

Wall Street fell sharply today, following two disappointing economic reports and a speech by President George Bush to the United Nations demanding action against Iraq.

The Dow Jones industrials dropped more than 200 points.

Federal Reserve chairman Alan Greenspan’s comments that “depressing effects” remain in the economy following the terror attacks also upset investors and led to sharp losses for the market.

The Dow fell 201.76, or 2.4%, to close at 8,379.41, after declining 0.3% in an abbreviated trading session on Wednesday to mark the September 11 anniversary.

The broader market also finished lower. The Nasdaq composite index declined 35.80, or 2.7%, to 1,279.65, having fallen 0.4% on Wednesday. The Standard & Poor’s 500 index fell 22.55, or 2.5%, to 886.90, following a drop of 0.1%.

Bush made his case for action against Iraq amid scepticism from world allies, saying the UN must force Saddam Hussein to destroy his weapons of mass destruction.

The speech reinforced investors’ concerns about a possible war with Iraq, which comes as the US economy struggles to recover from the recession and the effects of the terror attacks.

Earlier, Greenspan told Congress the attacks and stock losses are having a lingering impact on growth.

“To date, the economy appears to have withstood this set of blows well, although the depressing effects still linger,” Greenspan said.

Meanwhile, investors were unimpressed by economic reports on jobless claims and the trade deficit.

The Labour Department reported that new claims for unemployment benefits rose by 19,000 to 426,000, the highest level since April 20.

In a second report, the Commerce Department said the current account deficit, the broadest measure of trade, surged in the second quarter to a record dlrs 130 billion. Analysts were expecting a smaller deficit of dlrs 126 billion.

Bearish brokerage reports put pressure on shares of several companies. McDonald’s fell 99 cents to dlrs 20.35 after Goldman Sachs noted high financial uncertainties at the fast-food giant.

Chip makers declined after Lehman Brothers cut its 2002 growth forecasts for the sector. Philips Electronics, which also cut its third-quarter sales outlook, dropped dlrs 1.45 to dlrs 17. Intel fell 88 cents to dlrs 15.74.

Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, which tracks smaller company stocks, fell 7.10, or 1.8%, to 386.27.