NEW YORK -- Wall Street posted its biggest decline in a month Monday as the United States and Britain submitted a new U.N. Security Council resolution authorizing war against Iraq. Retail stocks also sagged on forecasts of sluggish sales.
The three main market indexes fell for their third session in four as investors avoided stocks. Trading was light.
"It's continuing concerns about Iraq and that Iraq will fail to comply with a U.N. order to destroy missiles," said Alan Skrainka, chief market strategist at Edward Jones of St. Louis. "Retailers are weak given the lack of confidence among consumers and investors."
The Dow Jones industrial average declined 159.87, or 2 percent, to close at 7,858.24, having gained 1.4 percent last week for its second straight winning week. It was the biggest one-day drop for the Dow since Jan. 30, when blue-chip stocks fell 165 points.
The broader market indexes also saw their biggest point declines since Jan. 30. The Nasdaq composite index dropped 26.64, or 2 percent, to 1,322.38, having advanced 3 percent last week. The Standard & Poor's 500 index fell 15.59, or 1.8 percent, to 832.58, following a weekly increase of 1.6 percent.
The United States and Britain introduced to the Security Council Monday a resolution that declares Iraq has violated its obligations to disarm, while France, Germany and Russia circulated a counterproposal for step-by-step disarmament of Iraq.
Saddam Hussein, meanwhile, indicated in an interview with CBS anchor Dan Rather that he did not intend to follow U.N. orders to destroy his Al-Samoud 2 missiles.
Analysts say concerns about war and terrorism have pressured the market, sending stocks to four-month lows earlier this month. Wall Street has seen some recent gains on bouts of bargain-hunting.
"Investors are discouraged and fearful, but the mood on Wall Street can change very quickly," Skrainka said, adding that he believes the market will see advances once questions with Iraq are more fully resolved.
John C. Forelli, portfolio manager for Independence Investment LLC in Boston, agreed.
"We've got a jumpy market waiting for the conflict to take place," he said. "Depending on the sentiment of the day, investors can think the worst case is already baked in, and another day think things can get even worse."
Retailers, meanwhile, fell after several reported that severe winter weather will depress February sales. Wal-Mart lost $1.26 to $47.64, while Federated Department Stores dropped 76 cents to $24.82, and J.C. Penney declined 95 cents to $19.39.
Ahold tumbled $6.53, or 61.1 percent, to $4.16 after the global grocery store operator said it overstated earnings in 2001 and 2002 by at least $500 million and that its leading executives will resign.
"With Ahold's announcement in Europe, that didn't bode well for the retail group in general," Forelli said. "It probably does resurrect some fears (about accounting scandals), by reminding investors there could still be some isolated problems out there."
VaxGen slid $6.16, or 47.3 percent, to $6.86 after trials for its AIDS vaccine failed to yield a statistically significant reduction of HIV infection within the study population as a whole; however, it did show some effects among blacks and Asians.
Gainers included Lowe's, which climbed $2.08 to $38.10, after the second largest home-improvement retailer reported fourth-quarter operating profits that beat Wall Street's expectations by 7 cents a share.
Devon Energy rose 7 cents to $48.30 after it agreed to buy Ocean Energy for $3.5 billion in stock to become the largest U.S.-based independent oil and gas producer. Ocean Energy gained 73 cents to $20.
Declining issues outnumbered advancers 5 to 2 on the New York Stock Exchange. Consolidated volume was light at 1.53 billion shares, compared with 1.72 billion traded Friday.
The Russell 2000 index, a barometer of smaller company stocks, fell 6.14, or 1.7 percent, to 358.22.
Overseas, Japan's Nikkei stock average finished 0.6 percent higher Monday. In Europe, France's CAC-40 dropped 1.6 percent, Britain's FTSE 100 dropped 0.7 percent and Germany's DAX index lost 2.9 percent.
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