Stock prices soared on Wall Street yesterday when the uncertainty surrounding the nation for the past four months started to clear up as signs showed the war with Iraq is imminent. The Dow Jones Industrial Average Index surged by 282.21 points – or 3.6 percent – to 8141.92. The triple-digit gain created the year’s best single-day performance, and pushed the index back up to the 8,000-point level for the first time since Feb. 21.
The frantic trading atmosphere was not limited to the Dow Jones Industrial Average Index – the Nasdaq Composite Index and S&P 500 Index also jumped up by 3.9 and 3.5 percent, respectively.
“The market is up today because of information saying that war is going to start soon and end soon,” Business Prof. Nejat Seyhun said.With various reports supporting the fact that the current gap of military strength between the United States and Iraq is even larger than the Gulf War’s, most Americans are expecting a quick victory over Iraq.
“The stock market hates uncertainties hanging over,” business Prof. E. Han Kim said. With more signs that the U.S.-led attack on Iraq will most likely begin within days “people can make a better sense of what might happen,” he said.
Kim added that the rallies did not mean the stock markets favor war but it indicated that investors welcome visibility in the future.
Although the markets skyrocketed yesterday, according to experts, the short-term performances of the markets and the economy are hard to predict.
“It’s sort of a psychological reaction to the fact that something is going to happen that will cause resolution to go either one way or another,” Business Prof. Richard Sloan said. “It’s hard to see any concrete economic implication at this point.” Seyhun said the strength of the U.S. economy will pick up once the war is over with relaxed oil prices and rebounded dollar exchange rates.
But Sloan said the impact of the war with Iraq would depend on the development of the situation.
“One thing that could happen is that things get wiped up pretty quickly, oil prices come down, and that could sort of revitalize the economy,” Sloan said. “But if things get blocked down and there’s a good chance that we’d just stuck in the bottom of the cycle like we are now.”