Dow and Nasdaq Post Massive Losses Amid Heavy Selling
An INTERACTIVE JOURNAL News Roundup
In a carry-over from last week's heavy selling and sharp declines, technology and blue-chip stocks finished with massive losses on Monday. The Dow Jones Industrial Average plummeted 512.61, or 6.37%, to close at 7539.07, dropping well below the 8000 level and below 7908, the level at the beginning of 1998. It was the second-largest point drop for the blue-chip index. The technology-laden Nasdaq Composite index plunged 140.52, or 8.57%, to 1499.16, its largest one-day point drop ever and also finishing well below its opening 1998 level. Traders said widespread pessimism, after several weeks of big losses by major market averages, swept across the market, creating broad-based pressure on a host of blue-chip, technology and small-capitalization stocks. "For the first time we're really seeing
significant worry on the part of clients," said Bill McLaughlin, vice president for investments at Smith Barney Inc. in Philadelphia. Monday's declines come on the heels of last week's losses when 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 9337.97, 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.
Stocks actually opened higher Monday, but soon moved into negative territory. The Standard & Poor's 500-stock index declined 41.40 to 985.70. The Russell 2000 index of small stocks dropped 16.30 to 342.30.
In the technology sector, investors continued to show concern about the U.S. government antitrust case against Microsoft. Microsoft shares
dropped 9 5/16, or 8.9%, to 95 15/16.
Internet and personal-computer stocks took a beating. America Online dropped 14 5/16 to 81 5/16, while Nasdaq-issues Excite fell 8 13/16 to 21 3/4 3/4, Amazon.com slid 22 9/64 to 83 3/4 and Yahoo dropped 14 1/8 to 69. Dell Computer dropped 18 3/4 to 100, while Compaq Computer dropped 2 7/8 to 27 7/8.
"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. 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.
The only bit of support for bulls Monday came 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 were little changed amid the turmoil. The yield on the 30-year Treasury, which moves in the opposite direction of its price, was at 5.32%.
World-wide, stocks slid in dollar terms. The Dow Jones World Stock Index was down 2.26 to 168.84 as of 2 p.m. EDT. In major market action: Stocks tumbled. On the Big Board, volume totaled 698 million shares, with 2,585 stocks declining and 579 advancing. Bonds are steady. 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 lower. It was at 1.7559 marks and 141.12 yen, compared with 1.7583 marks and 141.78 yen late Thursday in New York.
interactive.wsj.com
Falling knife indeed!
Regards, Jeff |
