Dow Jones articles this morning:
Focus: Will Tuesday bring continued decline?
(AP) So far, it is the bull market's great stumble. Whether Wall Street
actually stays in a huge free fall remains to be seen.
The Dow Jones industrial average fell 554.26 to 7,161.15 on Monday,
surpassing the 508-point crash of 1987 as its biggest point drop ever. It
prompted U.S. stock markets to shut down for the first time since the 1981
assassination attempt on President Reagan.
At the end of the day, $600 billion had been sold off.
On a percentage basis, the 7.18 percent drop by the Dow was only its 12th
largest. It didn't come close to the 22 percent loss on Oct. 19, 1987, the
largest ever.
But in the tangled global market - with changes overseas affecting Wall
Street and vice versa - it still sent Asian markets tumbling Tuesday.
The Hang Seng index of blue chip shares in Hong Kong fell 13.7 percent,
continuing a sharp selloff that has unnerved world financial markets. Traders
said the selloff was a panicked reaction to Wall Street's sharp drop.
In Tokyo, the Nikkei Stock Average lost 4.26 percent.
Other U.S. indices fell sharply, too. The Standard & Poor's 500-stock index,
the standard against which most mutual funds are compared, tumbled nearly 7
percent. The Nasdaq, dominated by technology companies that do more business in
Asia than most other American industries, also suffered its worst one-day point
drop ever at 115.83 points, or 7.02 percent.
All of which underscored the importance of Tuesday's trading.
''We are now in a psychological market, and predicting what support levels
might hold and what might be a bottom is an exercise in futility,'' said Ricky
Harrington, an analyst at Interstate/Johnson Lane in Charlotte, N.C.
The sudden financial collapse in Hong Kong has ignited fears about whether
Southeast Asia's shaky economies will undermine the global economy.
But with a majority of major American companies beating Wall Street
forecasts again with their latest profit reports and the outlook on domestic
inflation and interest rates remaining favorable, many analysts concluded that
the stock market's downturn should prove temporary.
And analysts stressed that although plenty of U.S. companies do business in
Asia, this nation's financial health is only slightly dependent on the fortunes
of Southeast Asia.
The U.S. stock market has been wonderful the past few years, said John
Shaughnessy, chief investment strategist at Advest Inc. in Hartford, Conn.
''So there are huge profits to be taken and this whole Southeast Asian
implosion, with all its vague potential, frightened people into taking
profits,'' he said. ''I take great heart in the fact that fundamentally, the
underpinning of our market is solid.''
The Dow's drop triggered two circuit breakers on the New York Stock Exchange
for the first time since they were put in place after the 1987 crash. The first
circuit breaker, when the drop reached 350 points, closed the market for 30
minutes. The second, at 550, halted trading for the day.
With the close, the Dow had fallen 1,100 points, or 13.3 percent, from its
Aug. 6 record of 8,259.31, ending an unprecedented run of seven years without a
''correction.'' The Dow was still up 11 percent since Jan. 1.
Many individual investors said they would stand firm.
''I wish I had more money to invest,'' said Helen Ginty, 60, a secretary in
New York.
''It's very healthy to shake some of this out,'' said Larry Rice, chief
investment officer at Josephthal, Lyon & Ross. ''We have a very sound economy
here. We're going to survive.'' |
