A winning week for stocks

NEW YORK -- After being pummeled for weeks by uncertainty over Iraq, Wall Street rallied Friday as the U.N. Security Council at least seemed to slow the march to war. The Dow Jones industrials soared more than 150 points, their biggest one-day gain in a month, and the market claimed its first winning week in five weeks.

The surge came after the Security Council rallied around calls for more weapons inspections, despite Secretary of State Colin Powell's warning it's too late. Even Britain, the strongest U.S. ally, held out hope for a peaceful solution if Iraq dramatically accelerates its cooperation.

Analysts struggled to explain the market reaction. Some said the weapons report suggested that a war might be averted, while others said it made war seem inevitable. Either way, both sides said Wall Street at least would know what to expect.

While investors are worried about war, they fear uncertainty more - - and Powell's comments appeared to suggest that the United States has made up its mind.

"I think the issue is we are being absolutely steadfast in our position. It is very clear that we are going to bring about a regime change in Iraq," said Joseph Keating, chief investment officer at AmSouth Asset Management. "We are at the end game."

The Dow closed up 158.93, or 2.1 percent, at 7,908.80, recouping a large chunk of the 170.24 points lost in the previous three sessions. Friday's win was the Dow's largest one-day victory since Jan. 9, when it rose 180.87.

The market's broader indicators also jumped sharply higher. The Nasdaq composite index rose 32.73, or 2.6 percent, to 1,310.17. The Standard & Poor's 500 index climbed 17.52, or 2.1 percent, to 834.89.

Extremely low trading volume and a string of recent sell-offs also made the market ripe for a rally.

Friday's buying spree enabled the indexes to score their first winning week in five weeks. For the week, the Dow and S&P 500 each rose 0.6 percent, while the Nasdaq gained 2.2 percent.

Many on Wall Street believe the market will rally after military action is undertaken in Iraq, as was the case with the Persian Gulf War.

"What I am hearing is: 'We are going to war in two to three weeks. The last time we went to war, we rallied. So, let's rally now,' " said Larry Wachtel, market analyst at Prudential Securities.

However, until there is more clarity, analysts are dubious that any gains would be long lived. Friday's advance was only the second in nine session as fears of terrorism and war have escalated.

"We have continuing geopolitical worries being brought to the fore," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.

Earlier Friday in Baghdad, in an apparent attempt to avert an attack, Saddam Hussein signed a decree banning the use of weapons of mass destruction.

Concerns about war have been the biggest drag on the market so far this year, stripping the Dow of about 900 points since Jan. 14, when the blue chips stood at 8,842.62, their high for 2003.

So far this year, the Dow has dropped 5.2 percent, the Nasdaq has lost 1.9 percent and the S&P has declined 5.1 percent.

Friday's batch of economic news was mostly upbeat. Industrial production surged in January, rising by 0.7 percent while businesses boosted inventories the month before -- two signs of promise for a flagging economy.

Meanwhile, the Commerce Department reported that U.S. companies boosted inventories by 0.6 percent in December, the largest amount in three months as retail sales during the holidays fell short of expectations.

But the University of Michigan's preliminary report on consumer sentiment for February was disappointing. The report showed a decrease in sentiment to 79.2 from 82.4 in January. Economists were expecting a reading of 82.0.

Among Wall Street's winners, Dell Computer climbed $2.52 to $25.77 after posting sharply higher fourth-quarter earnings late Thursday in line with analysts' expectations. Additionally, Dell was upgraded by Needham & Co. and First Albany.

Krispy Kreme Doughnuts surged $2.75 to $31.15 after the company said profits in the current fiscal year would jump 35 percent above those of the year just completed.

And, Johnson & Johnson gained 44 cents to $51.75 after AG Edwards raised its recommendation on the Dow industrial to "buy" from "hold."

Advancing issues outnumbered decliners about 9 to 5 on the New York Stock Exchange. Consolidated volume was light at 1.68 billion shares, below an already light 1.82 billion on Thursday. Stock prices are more prone to sharp swings when volume is so light.

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