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(REUTERS) U.S. stocks leap on hopes for short war in Iraq

(Updates to midday)
By Denise Duclaux
NEW YORK, March 17 (Reuters) - Stocks surged about 3
percent on Monday as a U.S.-led military strike on Iraq
appeared only days away, stirring hopes on Wall Street that the
war would end quickly and leave the U.S. economy relatively
unscathed.
"There are a percentage of traders who want to get in now,
thinking if we are very successful, very quickly they will have
missed the opportunity," said Rick Meckler, president of
investment firm LibertyView, which oversees about $1 billion.
President George W. Bush will issue an ultimatum to Iraqi
President Saddam Hussein on Monday night that Hussein step down
or face war.
United Nations Secretary-General Kofi Annan told the
Security Council on Monday he had ordered the evacuation of all
U.N. international staff from Iraq, council diplomats said.
Stocks erased opening losses and steamed higher as all
signs pointed to imminent war, lifting the uncertainty plaguing
the markets and boosting the shares of a broad range of
companies. Financial giant JP Morgan Chase & Co. <JPM.N> and
computer maker Hewlett-Packard Co. <HPQ.N> jumped about 6
percent. Heavy equipment maker Caterpillar Inc. <CAT.N> rose 5
percent, and retailer Wal-Mart Stores Inc. <WMT.N> climbed 4
percent.
"The market was trading a lot lower because there was no
decision, but now things appear to be a little clearer and we
have a better idea of what's going to happen," said James Park,
senior vice president at Brean Murray. "It looks like we'll be
going to war in two to three days and the war premium is being
priced into the market."
The blue-chip Dow Jones industrial average <.DJI> climbed
202 points or 2.57 percent to 8,061. The tech-laced Nasdaq
Composite Index <.IXIC> rallied 37 points, or 2.75 percent, to
1,377. The broad Standard and Poor's 500 <.SPX> climbed 20
points, or 2.44 percent, to 854.
Safe havens like gold and government bonds weakened and oil
prices dropped, while the dollar strengthened against the euro
as investors bet a U.S.-led war on Iraq would be a short one.
The blue-chip Dow is up almost 7 percent since the close on
Wednesday when the gauge came close to touching multi-year
lows. Last week's rise in the markets pushed the Nasdaq into
positive ground for the year.
Some market watchers warn any rally may be fleeting since
underlying worries remain over the the health of the nation's
economy and the long-term impact of a war that has divided
world powers.
"What are the costs and what happens if things go wrong?"
said Jack Caffrey, equity strategist at JP Morgan Private Bank,
which oversees $280 billion. "People are thinking, 'Can we
rebuild the country in two years? What does it cost, and will
there be increased instability in the region?'"
Advancers trounced decliners by a ratio of 23 to 9 on the
New York Stock Exchange and 19 to 11 on Nasdaq. More than 924
million shares were traded on the New York Stock Exchange, and
more more than 1.08 billion on Nasdaq in heavy trading.

BROAD-BASED RALLY
JP Morgan led the Dow higher with a $1.32 jump to $22.58.
Hewlett-Packard, another Dow member, advanced 91 cents to
$16.49. Caterpillar Inc. <CAT.N> rallied $2.46 to $49.48 and
Wal-Mart tacked on $2 to $51.36 -- giving the blue-chip gauge
more fuel for its rally.
InterDigital Communications Corp. <IDCC.O>, a designer of
wireless technology and product platforms, surged $5.20, or
almost 38 percent, to $18.96. The company said it reached a
patent and royalty settlement with Swedish telecommunications
equipment company Ericsson <ERICb.ST>. The U.S.-listed shares
of Ericsson <ERICY.O> rose 84 cents. or 13 percent, to $7.26.
Ford Motor Co. <F.N> climbed 36 cents, or 5 percent, to
$7.12, erasing earlier losses to track the market higher. JP
Morgan said it had cut its earnings-per-share forecasts for
Ford based on an outlook for lower-than-expected sales and
production in North America.
Discount retailer Dollar General Corp. <DG.N> rose $1.63
or15 percent, to $12.40. The company said quarterly earnings
rose on higher sales, and it issued a fairly upbeat forecast,
sending its shares 20 percent higher earlier in the day.
Eli Lilly & CO. <LLY.N> added 11 cents to $54.09, reversing
earlier losses. The drug company said an experimental lung
cancer drug, being developed in partnership with Isis
Pharmaceuticals Inc. <ISIS.O>, failed to show significant
benefit when used in combination with chemotherapy. Isis
tumbled $1.32, or almost 32 percent, to $2.84.
PEC Solutions Inc. <PECS.O>, a provider of software systems
for the U.S. government, plunged $5.61, or almost 36 percent,
to $10.19. The company said its first-quarter earnings per
share are expected to decline from a year ago due to late
contract awards and late approvals of 2003 federal civilian
agency budgets.
(With additional reporting by Elizabeth Lazarowitz, Vivian
Chu, Herb Lash)
(Reporting by Denise Duclaux; editing by Jan Paschal; Reuters
Messaging [e-mail],
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REUTERS
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