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France's stance leaves markets in a trance

Stocks tumbled Monday, pulling the Dow Jones industrial average down more than 170 points, after France said it was prepared to vote against a U.N. resolution on Iraq.

For investors, the French announcement raised the prospect of the United States going to war with Iraq without support from its allies.

"It is just a very gloomy picture," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. "Certainly the attitude, the psychology, the mood on Wall Street is one of gloom and doom, and that is continuing."

The declines were in keeping with the steep selloffs the market has suffered all year due to uncertainty about war and the impact it would have on the already shaky economy. Trading volume was very light, another sign that investors refuse to make major commitments.

"The irrational despair seems to imply that there is no floor to stock prices. The public without question has retreated psychologically and monetarily. The risk aversion is quite dominant," said Ned Riley, chief investment strategist at State Street Global Advisors.

With all 30 of its stocks falling, the Dow closed down 171.85, or 2.2 percent, at 7,568.18. The losses added to last week's decline of 1.9 percent, although the Dow finished higher on Friday.

The broader market also pulled back. The Standard & Poor's 500 index dropped 21.41, or 2.6 percent, to 807.48.

The Nasdaq composite index fell 26.92, or 2.1 percent, to 1,278.37.

"Usually when you get to these depths of pessimism something happens, a catalyst comes along and reverses market psychology. But what that catalyst may be is anyone's guess, still part of the guessing game," Cardillo said.

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