(Updates with early afternoon)
By Denise Duclaux
NEW YORK, March 21 (Reuters) - Stocks jumped in heavy trading on Friday, leading the Dow and the S&P 500 toward their eighth straight session of gains as investor hopes swell for a swift war and rumors swirl that Saddam Hussein is dead.
"The market is certainly reacting very positively to all the stories that emanate from Iraq," said Charles White, president of investment firm Avatar Associates. "As long as the military continues to execute with perfection, the stock market can have some legs."
Stocks leaped after a BBC report quoted a British official as saying the Iraqi president was likely killed in the first air strike on Baghdad. Britain's defense chief later said he could not confirm the BBC report.
Investors were glued to television sets flashing nighttime footage of bombs pounding Baghdad as the United States unleashed what it has dubbed its "shock and awe" campaign aimed at toppling the Iraqi regime.
The Dow Jones industrials climbed 150 points, or 1.80 percent, to 8,435, after surging more than 2 percent earlier. The Standard and Poor's 500 index rose 12 points, or 1.42 percent, to 888. The tech-laced Nasdaq Composite Index added 14 points, or 1.05 percent, at 1,417.
The rally has boosted the S&P 500 and Dow into positive territory and up 1 percent on the year, while the Nasdaq is up more than 6 percent for 2003.
Winners trounced losers by a ratio of 11 to 5 on the New York Stock Exchange and 3 to 2 on Nasdaq. More than 1.09 billion shares changed hands on the Big Board and more than 1.17 billion on Nasdaq in heavy trading.
"With the apparent success that allied troops are having in Iraq, the possibility for a substantial market rally exists," said Phil Flynn, vice president and senior market analyst with Alaron Trading Corp. "Rumors that Saddam Hussein may be dead helped spur some of the buying and if confirmed, this market could just explode."
The market had notched gains throughout the morning on rising expectations the war will bring a speedy victory for the U.S.-led forces, who swept through southern Iraq and seized strategic airfields.
"Anything that seems good for the war, you'll see the market shoot up on a sense of relief and emotional patriotism," said Peter Dunay, chief markets strategist and options specialist at brokerage Wall Street Access.
DUPONT LIFTS DOW
DuPont Co.
, the No. 2 U.S. chemical maker, lifted the Dow by jumping $1.53, or nearly 4 percent, to $41.15. The company stood by its quarterly profit forecast, citing strong results in its agriculture and pharmaceutical units, which have helped to offset higher energy and raw material costs.Electronic Data Services Corp. jumped $1.58, or 10 percent, to $17.34. The computer services company's chief executive, Richard Brown, has stepped down and will be replaced by former CBS Corp. chief executive Michael Jordan.
Sour corporate news failed to damp investor spirits as hopes mounted that corporate growth would pick up steam after the war against Iraq has ended.
Intuit Inc. , the maker of QuickBooks and TurboTax software, sank $11.20, or 22 percent, to $39.69. The company cut 2003 revenue and earnings growth targets, blaming the economic slowdown for soft sales across its product line.
State Street Corp. fell $4.71, or 12 percent, to $33.79. The financial services company said its quarterly earnings would likely be lower than expected due in part to stock market declines.
EMC Corp. , a data storage system maker, lost 53 cents, or 6 percent, to $7.28. DB Securities EMC to "hold" from "buy" on valuation, uncertain business trends and the recent bounce-back in its shares.
CONSUMER PRICES RISE
The war overshadowed the day's economic data. U.S. consumer prices posted their biggest gain in more than two years in February as energy surged on the march to war with Iraq and food costs jumped, the government said. But the Consumer Price Index showed inflation well-contained apart from volatile food and energy costs.
Some market watchers pinned part of the stock market's gains on the so-called "quadruple witching" when equity options, single stock futures and some stock index futures and stock index options all expire on the same day. They cautioned that the expirations may trigger market swings during the day. (With additional reporting by Vivian Chu, Doris Frankel, Herb Lash)