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. Last Updated: 07/27/2016

U.S. Rally Lasted Just 4 Minutes

NEW YORK -- The dramatic weekend capture of former Iraqi dictator Saddam Hussein sent stock prices soaring on Monday morning. For about four minutes.

After rising nearly 100 points at the opening bell, the Dow Jones industrial average, along with the other major indexes, retreated the rest of the day, as investors wondered whether the capture would fundamentally alter the security situation on the ground in Iraq or significantly reduce the threat of terrorist attacks in the United States.

"I came in today and told people to sell right after the opening bell, because I thought that would be the high of the day," said Todd Leone, head of listed trading at the investment firm SG Cowen.

"Basically, this was great news but not tremendous news," Leone said, in a refrain echoed by several other traders and money managers. "People already either thought he was dead or had no power. And clearly he had not been talking to anybody, so the feeling was that the arrest was not necessarily going to change things a whole lot."

Several traders and money managers said the brief euphoria over Hussein's capture quickly gave way to concern that stocks are no longer cheap and that the market rally of 2003 may not continue as strongly in 2004. Word from retailing giant Wal-Mart Stores that sales would come in at the low end of its forecast did not help matters. Wal-Mart shares helped drive down the Dow, dropping $1.76, or 3.4 percent, to close at $50.74.

After peaking at 10,139.56 at 9:34 a.m., four minutes after the opening bell, the Dow finished the day down 19.34 points, or 0.2 percent, closing at 10,022.82. The broader Standard & Poor's 500-stock index lost 6.10 points, or 0.6 percent, closing at 1,068.04. The technology-heavy Nasdaq composite index fared the worst, closing at 1,918.26, down 30.74 points, or 1.6 percent.

Wall Street professionals said one reason the "Saddam rally" did not last longer was that news of the arrest reached U.S. investors on Sunday morning, giving them 24 hours to digest the information and question its significance.

"Had this happened during regular trading hours, you would have seen a much bigger roller coaster ride," said Art Hogan, chief market analyst at Jeffries & Co. "Everyone had time to say, 'Great. But what does this fundamentally mean for the market?'"

Hogan added, "It helps reduce geopolitical risk, but it doesn't flip a switch and immediately move investors out of gold and bonds" and back into stocks.

Gold and bonds, which have done well the past year, are viewed as safe havens for money in uncertain political times. Gold prices dropped in electronic trading after Hussein's capture but recovered Monday as the stock market retreated. Gold for current delivery fell to $409.20 per troy ounce from $409.40 on Friday, on the New York Mercantile Exchange's Commodity Exchange.

Oil prices, meanwhile, rose slightly on Monday as two car bombings in Baghdad dashed hopes that Hussein's capture would put a quick end to the anti-American insurgency in Iraq.