On Wall Street, War Is Not a Buy

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Wall Street greeted the air strikes right after the close of trading Wednesday with all the excitement of a mid-season basketball game, and Thursday is about the same. "There was absolutely no sense of real worry or panic when word started circulating in the markets yesterday," said one floor trader. "People on the trading floor were taking bets on what time the first air strike would occur." In fact, the markets were almost relieved by the bombing of Iraq, since it delayed an impeachment vote and has cast President Clinton in a strong leadership stance. Oil stocks that spiked sharply at first soon settled back toward normal levels: After all, world markets are overflowing with oil. "I don't even expect much more movement in the stocks you historically see getting the most attention in these situations, like energy companies or defense-related businesses," says Gail Dudack, Warburg Dillon Reed's chief investment strategist.

Special ReportMONEY Daily's morning gut-check with top analysts and traders on Thursday found them counseling "watch and wait," but not expecting anything approaching a selling frenzy. All of that could change very quickly, though, if U.S. troops become involved on the ground. For now, some traders are taking some precautionary steps to get out of international stocks. "We have been doing some swapping," says Hugh Johnson, First Albany's chief investment strategist. "We've sold some stocks with big international exposure, like Dupont, ConAgra and Phillips Petroleum, and have bought Staples and McGraw Hill. I'm trying to make our portfolio a little more insulated from world events."