Stock Rally Short-Lived

It felt good for a few days, but the stock rally has subsided as the picture of the war with Iraq gets darker with increased struggles and more casualties. The worldwide rally in stock prices ended abruptly yesterday, with declines particularly sharp in Europe, as American-led forces in Iraq ran into fierce fighting in their drive to Baghdad. The major United States stock indexes fell at least 3.5 percent, but that performance was relatively good compared with that of many European markets. The leading Dutch index plunged 6.4 percent, and indexes in France, Germany and Switzerland fell 5 percent or more.

Expect the psychological roller coaster related to the stock market and economy to continue as the war proceeds. People are not prone to any additional risk-taking with the current state of world affairs being what they are.