The Dow Jones industrial average finished down 141.45 points, or 1.74%, to 7,989.56. The broader Standard & Poor's 500-stock index lost 13.92 points, or 1.62%, to 847.48. And the tech-laden Nasdaq composite index declined 16.86 points, or 1.26%, to 1,325.28.
Despite a heavy plate of earnings reports from large companies expected this week, political and economic news is likely to overshadow corporate news. In his report to the U.N., Blix indicated that the inspections team had not found weapons of mass destruction, but cast doubt over the level of cooperation from Iraq. U.N. Secretary General Kofi Annan said that inspectors should be given more time before any action in Iraq is taken.
On Tuesday, President Bush will give the annual State of the Union address to Congress, in which he is expected to brace the nation for a coming war with Iraq. Most of Europe, Russia, and China are opposing action in Iraq. News agencies also quoted U.S. officials as saying that Saddam Hussein intends to damage or destroy his oil fields if war breaks out.
On the economic front, existing home sales rose 5.2% to a 5.86 million unit annual pace in December. The figure was slightly higher than expected and gave equity indexes a temporary boost Monday morning, but those gains were lost as investors turned their focus to Blix's report.
Tuesday brings still more economic data. On tap: durable goods orders, new home sales numbers, and the Conference Board's consumer confidence index. Additionally, on Tuesday the Federal Open Market Committee begins a two-day meeting, at which the Fed will discuss monetary policy. The Fed is expected to hold interest rates steady.
In addition to the range of political and economic news, investors will eye plenty of corporate earnings announcements Tuesday. Among the large companies expected to make quarterly announcements are AT&T Wireless (AWE
), Biogen (BGEN
), Du Pont (DD
), Kraft (KFT
), Merck (MRK
), Procter and Gamble (PG
), and SBC Communications (SBC
Monday brought a slew of mixed earnings reports, which failed to sway investor sentiment in light of the U.N. weapons report.
The world's largest meat producer, Tyson Foods (TSN
), reported a drop in operating earnings for the first quarter and quarterly earnings of 10 cents a share, below Wall Street's expectations.
In other food-related news, food service provider Sysco (SYY
) posted second quarter earnings of 28 cents a share, in line with analysts' expectations.
Paper goods maker Kimberly-Clark (KMB
) announced profits of 76 cents a share before one-time items, slightly exceeding analysts' expectations. The Dallas-based company said sales for the fourth quarter were flat.
Mortgage consolidator Freddie Mac (FRE
) said fourth quarter earnings rose 25% owing to a continued strong housing market. However, future earnings growth was called into question, as the company announced it would restate earnings from as far back as 2000, to reflect new audits of its derivative holdings.
Hilton Hotels (HLT
) posted fourth quarter profits of 11 cents a share, a penny ahead of Wall Street's forecast. However, Hilton cut its 2003 earnings outlook, citing concerns about a possible war with Iraq, and higher property taxes and insurance costs.
Financial services firm American Express (AEXP
) announced fourth quarter earnings of 52 cents a share, in line with expectations. Holiday charge card spending drove profits.
In other corporate news Monday, Johnson & Johnson (JNJ
) announced it would take a fourth quarter charge to reimburse Amgen (AMGN
) for legal fees and other costs associated with a licensing dispute between the two companies.
UBS Warburg upgraded to neutral from reduce U.S. wireline telecommunications companies Verizon (VZ
), BellSouth (BLS
), and SBC Communications (SBC
In commodities news, oil prices eased off recent highs Monday, as U.N. weapons inspectors were likely to be granted more time to complete inspections in Iraq, and Venezuela President Hugo Chavez appeared to be approaching an end to an eight-week general strike.
Treasury prices traded lower Monday, on unexpected positive economic news and an unsurprising, though grave, U.N. weapons report.
"The contract quickly slipped under a barrage of selling pressure after much better than expected existing home sales were released. The Blix report before the U.N. had only minor impact," notes economic research firm MMS International.
European stocks finished lower Monday, amid disappointing economic news and increased fears of war. Finishing a record 11th-consecutive session down, London's FTSE index lost 122.90 points, or 3.41%, to 3,480.80.
In Paris, the CAC-40 index lost 102.82 points, or 3.55%, to 2,795.78. In Frankfurt, the DAX index was down 74.02 points, or 2.72%, to 2,643.80.
In Asia, stocks finished with losses. Japan's Nikkei 225 index fell 122.18 points, or 1.40%, to 8,609.47. Meanwhile, Hong Kong's benchmark Hang Seng index declined 161.93 points, or 1.71%, to 9,298.67.