(The DJIA and NASDAQ had been "tumbling" all day; I don't know why this headline wants the Air Strike to take the blame, but...)

-----

Friday February 16 2:35 PM ET
Stocks Tumble As Air Strike Adds Fresh Gloom

NEW YORK (Reuters) - Stocks tumbled in mid-afternoon trading on Friday, sinking to fresh lows for the day, after news of a U.S. attack on Iraq filtered through a market already reeling over dour profit outlooks from high-tech bellwethers and a spike in last month's inflation rate.

The Defense Department confirmed air strikes by American and British warplanes on targets south of Baghdad. A Defense Department official, speaking on condition of anonymity, said coalition aircraft struck Iraqi radar systems at about 12:30 p.m. to 1 p.m. EST.

The strikes were in retaliation for increased Iraqi activity to target Western aircraft in the southern no-fly zones, the official said.

``When you get a piece of news like this, it only heightens the uncertainty in the market and creates greater likelihood of ulcers,'' said David Sowerby, a market strategist for Loomis Sayles, which oversees about $65 billion. ``But the market is really responding to all the profit warnings.''

The technology-packed Nasdaq Composite Index dropped 148 points, or 5.80 percent, to 2,404, after earlier falling 6 percent, or 153 points, to 2,400.

The Dow Jones industrial average fell 154 points, or 1.42 percent, to 10,736. The broader Standard & Poor's 500 Index tumbled 31 points, or 2.37 percent, to 1,295.

``Anything that increases the risk premium at the moment is not a positive for the market,'' said Don Ross, chief investment officer at National City Corp., referring to the attack. ``But it's hard to attribute any one thing to this market; the Fed may be not as forceful (in cutting interest rates) and Nortel's numbers on the back of that is not helping. We have at the moment some pretty rough psychology.''

Some of the technology sector's biggest names -- fiber-optics supplier Nortel Networks Corp., computer maker Dell Computer Corp., and computer and printer company Hewlett-Packard Co. --
cast a pall over the market with dour forecasts for near-term growth.

To make matters worse, the U.S. government's Producer Price Index (PPI) logged its biggest one-month gain in more than a decade in January. While the surprisingly strong numbers were largely viewed as an aberration, the figures raised questions about how deeply the Federal Reserve will be willing to cut interest rates.

-----