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Wall Street Poised to Fall Sharply


Monday March 24, 5:58 AM EST

LONDON (Reuters) - Wall Street is set to open sharply lower on Monday, weighed by concerns that the U.S.-led war against Iraq may not be as brief as the market had initially anticipated.

U.S. equity index futures showed the Dow Jones industrial average (DJI) would fall some 140 points at the opening, while Nasdaq 100 futures indicated the tech-laced exchange would also open sharply weaker.

"It looks as though we just got too far ahead of ourselves, without a doubt. We could have rather a negative session today, unless the news from Iraq is more upbeat later in the day," said David Buik at Cantor Index.

Shares in the largest U.S. tobacco company Philip Morris (MO) (MO) fell sharply after a U.S. judge ruled it had deceived smokers into thinking "light" cigarettes were safer than regular cigarettes and ordered it to pay $10.1 billion in damages.

The stock was down 5.9 percent in Frankfurt at 31.15 euros ($33) from a New York close of $35.04.

But all eyes were on the conflict in Iraq, where U.S.-led troops were facing stiff resistance from Iraqi fighters, worrying some traders that the conflict could be more drawn out than they had originally anticipated.

Fierce air strikes continued to pound Baghdad on Monday, a day after U.S. and British troops suffered their heaviest combat casualties in their five-day-old war to overthrow Iraqi leader Saddam Hussein.

"The longer this goes on the bigger the drag on the economy. And the bigger the drag on the economy the less rebound in corporate profits," said Steve Previs at Jefferies International.

"The bottom line is a quick victory would be good for the market and the economy, but if this drags on for two or three months it would be disaster for the market and a disaster for the economy," Previs said.

With little corporate or economic news to chew on, traders said investors would remain glued to their television screens awaiting fresh developments in the war against Iraq.


©2003 Reuters Limited.