Technology Woes Push Dow Below The 8000 Level
An INTERACTIVE JOURNAL News Roundup
Stocks tumbled Monday, pushing the Dow Jones Industrial Average below the 8000 level, as the persistent selling that led to sharp declines last week continued. Technology stocks were the weakest sector in the market, with the Nasdaq Composite Index off 77.30, or 4.72%, to 1562.30. The Dow industrials were down 125 to 7927, after briefly dipping below the 7908 level at the beginning of 1998. The Standard & Poor's 500-stock index declined 23.10 to 1004.10. The Russell 2000 index of small stocks dropped 14.10 to 345.30, In the technology sector, the Nasdaq index also traded below its 1988 opening level. Investors continued to show concern about the U.S. government antitrust case against Microsoft Corp. Microsoft shares were down 4 3/8 to 100 7/8. Internet and personal-computer stocks took a beating. America Online dropped 5 7/8 to 90 3/8, while Nasdaq-issues Excite fell 2 5/8 to 27 15/16, Amazon.com slid 9 57/64 to 96 and Yahoo dropped 6 1/8 to 76 15/16. Dell Computer dropped 9 1/2, or 8%, to 109 1/4, while Micron Electronics fell 15/16 to 12 7/8, while Compaq Computer dropped 1 7/16 to 29 5/16. "The panic button just went off," said William Blair analyst Abhishek Gami," and a lot of stock prices were cut right in half."
The global backdrop remains a challenging one, featuring more tumult in Russia, and a steep selloff in Hong Kong in the wake of that government's decision to halt its recent intervention in the equities market. While some buying emerged and pushed stocks a bit higher at the opening, more investors seemed to take the small rally as a signal to resume selling stocks. "Markets [here] are extended on the downside and in position to rally," A.C. Moore, investment strategist at Dunvegan Associates, said in a report Monday. "But, since markets may not be structurally sound enough, or sold out enough at this juncture to rally on bad news, they need an absence of bad news for awhile."
Major market averages lost more ground last week than they did in any previous week of the year. The Dow industrials gave up 482 points, its worst week not only of this year, but of all time, based on points lost. At July's peak, when the Dow was at 9,337.97, it had been up 18.1%. The drop of 15.2% from the July record is the biggest retreat since a 21.2% slide triggered by the Persian Gulf crisis in the summer and fall of 1990.
President Clinton, who has adjourned his summer vacation, departed Monday for Moscow, where he will hold a summit meeting with that country's embattled president, Boris Yeltsin. "Until we get some kind of leadership somewhere, it's going to be tough," said Ned Collins, head of trading at Daiwa Securities America.
On the economic front, the Commerce Department reported that new-home sales fell 1.6% in the U.S. last month but remained well ahead of last year's pace. Despite the decline in sales, the median price of a new home rose in July.
Bulls got a bit of support Monday from strategists at two Wall Street firms. Prudential Securities' Greg Smith and Charles Pradilla at SG Cowen Securities both raised the percentage of stocks they recommend that investors hold in their portfolios. Bonds showed some modest gains on continued "flight-to-quality" attraction in the wake of international turmoil and plunging domestic equity prices. The yield on the 30-year Treasury, which moves in the opposite direction of its price, was at 5.32%, down from 5.33% late Friday. World-wide, stocks eased in dollar terms. The Dow Jones World Stock Index was down 2.75 to 168.35 as of noon EDT.
In major market action: Stocks tumbled. On the Big Board, volume totaled 484 million shares, with 2,444 stocks declining and 596 advancing. Bonds slipped. The 30-year bellwether Treasury bond was up 1/8 point, or $1.25 per $1,000 bond. Its yield, which moves in the opposite direction of its price, stood at 5.32%. The dollar was mixed. It was at 1.7594 marks and 141.10 yen, compared with 1.7583 marks and
141.78 yen late Thursday in New York.
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Regards, Jeff |
