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Dude, I was just about to start the exact same thread. I heard it's because foreign policy analysts came back with a report that they expect a similar timeline to 1991 (i.e. over and done in 100 hours).
The threat of war makes people wary, hence they hesitate to purchase stocks. There are also other concerns, such as the move to more stable investments (gold, etc.) and rising oil prices with concerns over supply, that divert funds from stocks.
At the start of a war people assume a quick victory and the usual results (a surge in confidence, lower oil costs, increased spending, etc.). As a result, they want to get in quickly, when prices are low.
I think that is a dangerous strategy this time around. There are underlying problems with the economy that will not go away with a war and/or victory in Iraq. I think the uptick we see will be short-lived. The market will only begin to rise once there is a prolonged economic expansion.
And, don't forget the doomsayers COULD be right-we could be in for a nasty period of terrorism and firefights around the world.
One commentator said that the whole American economic boom was largely based on a combination of foreign capital inflows (down 78% from 2 years ago) and a relatively cheap dollar. (He also said that the only thing that would "solve" the economy is a REALLY nasty Depression to blow out all of the excessive production capacity in the world economy. Let's hope not)