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Bin Laden Tape Sends Stocks Down

Stocks fell across the board Tuesday as news of a statement believed to be from terror mastermind Usama bin Laden unnerved Wall Street investors.

Also weighing on sentiment was Federal Reserve Chairman Alan Greenspan's cautious outlook on the economy. Greenspan, in testimony before a Senate committee, said uncertainties created by possible war with Iraq posed "formidable barriers" to business spending and clouded the economic outlook.

But Wall Street's focus was on bin Laden, the fugitive Saudi-born militant blamed by Washington for masterminding the Sept. 11 attacks.

The blue-chip Dow Jones industrial average fell 77 points, or 0.97 percent, to 7,843.11. The broader Standard & Poor's 500 Index ended off 6.77 points, or 0.81 percent, at 829.20. The tech-laced Nasdaq Composite ended off 1.22 points, or 0.09 percent, to 1,295.46.

Stocks, which were up earlier in the session, took a turn to the worse after the tape said to be from bin Laden warned Arab states against backing any U.S.-led war on Iraq and said suicide attacks were important in fighting America.

Al-Jazeera satellite television channel in Qatar broadcast the statement, which also urged Muslim solidarity with Iraq. Secretary of State Colin Powell said the message suggests Iraq is linked to global terrorism.

"If that's the case, then war is inevitable," said Anthony Iuliano, head trader for Glenmede Trust Co., referring to Powell's comments.

"The reason why we're not rallying is there are so many issues still on the table, (with) Greenspan coming out and saying a possible war with Iraq is hurting our economy. If you take this war off the table, our market's up," Iuliano said.

"Everybody is basically waiting on the sidelines in a market like this with all these rumors about links between al Qaeda and Iraq," said Steve Milona, a trader at HSBC Securities. "Volumes are particularly weak today. There is just a lot of money on the sidelines. We are not hearing a lot of clients calling up with trading ideas or anything."

In his twice-yearly testimony before the Senate Banking Committee, Greenspan warned of the need for curbs on deficits and spending in a speech delivered at a time of wrangling among lawmakers over the Bush administration's proposed $695 billion, 10-year tax package.

One of the biggest drags on the Dow was SBC Communications Inc. (SBC) , which fell 79 cents to $23.71, or 3.2 percent, a day after the No. 2 U.S. telephone company was being pummeled by talk that it may be interested in buying Hughes Electronics Corp.'s DirecTV unit.

Helping to keep a floor under Nasdaq, some semiconductor shares were showing strength after Texas Instruments Inc. (TXN), the top maker of semiconductors for cell phones, reaffirmed that it expects first-quarter earnings of about 6 cents per share.

Texas Instruments rose 36 cents to $15.44. Among other issues in the sector, Xilinx Inc. (XLNX)rose 70 cents to $19.62, Motorola Inc. (MOT) moved up 12 cents to $8.15 and Intel Corp. rose 7 cents to $15.34.

Among active issues, Web gear maker Cisco Systems (CSCO) rose 32 cents to $13.47, or 2.4 percent, and was the most active stock on Nasdaq.

Aetna Inc. (AET), which ranks second behind UnitedHealth Group Inc. (UNH ), said it swung to a profit on steeper premiums and cost cutting. It rose $1.55 to $43.40.

Yum Brands(YUM), the No. 2 restaurant company behind McDonald's Corp. , said its earnings rose 5 percent, helped by acquisitions, a lower tax rate and higher sales. It rose $1.37 to $23.80.

MetLife Inc. (MET) fell $1.38, or 5.3 percent, to $24.62. The No. 1 U.S. life insurer has reported a quarterly profit against a year-earlier loss, helped by gains from real estate sales, but MetLife took an unexpected charge as it boosted its estimate of the costs of settling asbestos claims it faces.

Scholastic Corp. (SCHL) , U.S. publisher of the popular Harry Potter books, slumped $7.71 to $25.95 after it warned that its third-quarter and full-year results would fall short of expectations due to weaker-than-expected January sales.

Shares of LeapFrog Enterprises Inc. (LF), a maker of educational toys, fell more than 16 percent a day after the company forecast earnings for the year that disappointed Wall Street. LeapFrog fell $3.95 to $20.60.

Sierra Pacific Resources Corp. (SRP), parent of two Nevada utilities, was the NYSE's most active stock and fell 77 cents to $3.75 after it said it was seeking to raise $250 million via a private placement of convertible notes and would use the proceeds in part to redeem floating rate notes.

Trading volumes were moderate with about 1.3 billion shares traded each on the New York Stock Exchange and the Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, fell 2.14, or 0.6 percent, to 359.96.

In Europe, France's CAC-40 climbed 2.5 percent, Britain's FTSE 100 rose 2.5 percent and Germany's DAX index gained 1.6 percent. Japan's financial markets were closed Tuesday for National Foundation Day, a national holiday.

Reuters and the Associated Press contributed to this report.