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Associated PressAn opening spurt in prices didn't last, as euphoria about Iraq gave way to dismay about Wal-Mart's poor showing.
NEW YORK - Wall Street sank lower Monday as disappointing sales at Wal-Mart Stores Inc. chilled the retailing sector and eroded early gains spurred by the capture this weekend of Iraqi leader Saddam Hussein.
Stocks traded briskly around the globe on news that Hussein was in custody, but the rally was short-lived on Wall Street. The major indexes shot up initially, but steadily retreated as investors refocused on the domestic picture. While the arrest was important news for U.S. forces in Iraq, analysts were not surprised by its limited impact on the markets.
"This is a geopolitical event that gave us a nice, short-term blip, but it wasn't the kind of news that would drive us to even loftier levels," said Brian Williamson, an equity trader at the Boston Company Asset Management. "The war is by no means over; this is just one piece of the puzzle and not a cause for a huge end-of-war celebration."
After soaring nearly 100 points in the first minutes of trading, the Dow Jones Industrial Average wheezed to a negative finish, ending the day down 19.34, or 0.2 percent, at 10,022.82.
The broader gauges were also lower. The Nasdaq composite index closed down 30.74, or 1.6 percent, at 1,918.26, after surging nearly 1 percent earlier in the day. The Standard & Poor's 500 index lost 6.10, or 0.6 percent, to close at 1,068.04.
Overseas markets gained. Japan's Nikkei stock average finished 3.2 percent higher following news of the arrest. The reaction was more muted in Europe, where major indexes lost ground but still ended the day higher. France's CAC-40 closed up 0.6 percent, Britain's FTSE 100 rose 0.01 percent, and Germany's DAX index ended the day 0.4 percent higher.
The U.S. dollar also experienced a mid-session reversal, rising early in the day before plunging to a new low against the euro. "The dollar was up briefly after the capture of Saddam but the markets realized this would not really change anything," said David Solin, partner at Foreign Exchange Analytics, an Essex, Conn., research firm.
Gold rose in Europe but later declined in New York.
Saddam's arrest could signal a turning point in Iraq, where U.S.-led forces have faced scattered resistance. But there were worrisome signs Monday that the insurgents would continue their campaign, as a suicide bomber drove a taxi into a police station on the northern outskirts of Baghdad, killing eight Iraqi policemen.
Analysts said Saddam's capture may reduce resistance to U.S.-led troops in Iraq, which could lead to fewer disruptions in the nation's oil fields. The capture also could help ease lingering concerns about the economic recovery and persuade investors to take on more risk.
"These psychological things, like the Dow crossing 10,000 and the capture of Saddam Hussein, are exactly the types of things we need to draw individual investors from the sidelines," said Jeffrey Kleintop, chief investment strategist for PNC Advisors of Philadelphia. "At a gut level, this is one more risk that's out of the equation."
Strong economic data and solid corporate outlooks have given stock prices a boost, but some analysts have questioned whether the valuations are justified. Interest rates also remain a concern for investors, and many were watching for the Labor Department's report on consumer prices, scheduled today. The index is the government's most closely watched inflation barometer.
Analysts took heart that Monday's slow sell-off was not panic-driven. Jack Caffrey, equities strategist at J.P. Morgan Private Bank, said it underscored the caution of many investors.
"It feels like people are looking to get a little bit more defensive going into the holidays and to protect their gains," Caffrey said.
Few were warmed by the news from retailing titan Wal-Mart, which lost $1.76 to close at $50.74. The world's largest retailing chain said December growth at stores open at least a year was near the low end of its 3 percent to 5 percent projected range, and traffic was down for the week.
Decliners outnumbered advancers nearly 2 to 1 on the New York Stock Exchange. Consolidated volume was heavier, with 1.90 billion shares traded, compared with 1.57 billion shares on Friday.
The Russell 2000 index, which tracks smaller company stocks, closed down 12.34, or 2.2 percent, at 535.25.