Updated from April 9

The war in Iraq has been going on for a year, but it wasn't until this past week that the stock market registered any serious concern.

Sure, stocks sold off mightily last March on the eve of war, but that was just a momentary blip in what turned out to be a sustained upward march. In the main, Wall Street -- at least as measured by prices -- has held up well, as long it looked like the invasion would do no harm to the economic recovery and President Bush's re-election chances.

That composure changed with the shocking images of Iraqis dragging the mutilated bodies of four dead U.S. civilians through the streets of Fallujah, the news of Shiite uprisings in several cities, a surge in U.S. military casualties and a general sense that things in Iraq are spinning out of control.

By week's end, some of Bush's political enemies were comparing Iraq to Vietnam. A poll taken by the nonpartisan Pew Research Center finds U.S. support for keeping troops in Iraq slipping and President Bush's approval rating falling to 43% -- its lowest level yet. Even some of the president's supporters were beginning to whisper that the administration's Iraq strategy was veering off course.

Wall Street saw its own slippage in the wake of the events in Iraq. After rallying 5% in the prior two weeks, the Dow Jones Industrial Average fell 1.2% in an abbreviated trading week because of the Good Friday holiday. The Dow fell despite a strong start to the first quarter earnings season with good numbers posted by General Electric ( GE), SunTrust ( STI) and Yahoo! ( YHOO). The Nasdaq Composite ended the week down about 1%.

Concern grew over the weekend following reports that Bush was briefed in August 2001 about investigations into possible terrorism threats in the U.S. Various media outlets were reporting Saturday that in August 2001, U.S. intelligence officials also received two uncorroborated reports suggesting that terrorists might use airplanes as terror weapons.

To be sure, some of the selling is due to the profit-taking that often follows a run-up into the beginning of earnings season and the big bounce stocks got from a strong March jobs report. But market watchers see something more ominous in the past week's events, and it stems from investor concern that Iraq could imperil Bush's re-election chances, no matter how well the economy performs.

If you liked this article you might like

SEC Charges Ex-CIBC Broker

SEC Charges Ex-CIBC Broker

Durus Manager Gets Hard Time

Durus Manager Gets Hard Time

Shift for SAC's Cohen

Shift for SAC's Cohen

New Frontier Holder Selling

New Frontier Holder Selling

PIPE Deal Shines Up Sun

PIPE Deal Shines Up Sun