Wall Street falls as investors remain nervous

A tepid productivity report gave investors more reasons to sell today, sending stocks moderately lower and carrying the Dow Jones industrials and Standard & Poor’s 500 index to levels not seen in nearly four months.

Analysts said trading was uneven as investors made short-term bets on whether or when the United States would wage war on Iraq. Tensions with North Korea also pressured the market.

“It’s been sloppy and choppy in the last few sessions as speculative trading entered the fray,” said Bryan Piskorowski, market commentator at Prudential Securities.

“The lacklustre productivity figures are definitely not a step in the right direction.”

“There’s a massive wait-and-see mentality here, not only on Wall Street but Main Street as well,” he added. “With that being the case, speculative action is making the most of it.”

The Dow fell 55.88, or 0.7% to close at 7,929.30, for a three-day loss of 180 points. It was the lowest level seen since October 14, when blue chip stocks finished at 7,877.40.

The broader market finished mixed. The S&P 500 index dropped 5.44, or 0.6%, to 838.15, the lowest since October 11, when it closed at 835.32. The Nasdaq composite index inched up 0.23, or 0.02%, to 1,301.73.

A pair of mixed economic reports, particularly one showing sluggish productivity, added to the market’s foul mood as investors also kept watch over the situation with Iraq.

The Labour Department reported that US companies’ productivity fell at an annual rate of 0.2% in the final quarter of 2002, the worst showing in more than a year. Economists predicted a 0.7% rise.

Separately, the department said new claims for unemployment benefits fell last week by a seasonally adjusted 11,000 to 391,000. That was a turnaround from the previous week when claims rose by 19,000, suggesting the pace of layoffs may be stabilising although employment remained sluggish.

Analysts say investors remain hesitant to commit to stocks due to concerns about a war with Iraq – that reluctance has fed steep declines in the past three weeks. But they add the market could see some short-term rallies based mostly on bargain-hunting and generally positive earnings news.

Secretary of State Colin Powell told the Senate Foreign Relations Committee the Iraq situation will be brought to a conclusion “within weeks.”

Meanwhile, the White House said it had “robust plans for any contingencies” involving North Korea, a day after the country said that pre-emptive attacks on its nuclear facilities would trigger “total war.”

Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, a barometer of smaller company stocks, fell 2.25, or 0.6% to 364.74.