IKE Here's what I was talking about on Latin America....problems ahead.....serious problems...for European & Americn banks....
U.S. stocks end sharply lower, Latam
concerns grow
By Marjorie Olster
NEW YORK, Sept 3 (Reuters) - U.S. stocks slumped Thursday
on growing concerns about the financial health of Latin America
after a Colombian devaluation and a slide in regional share
markets.
Bank shares, which had already been under pressure from losses
due to Russian exposure, were hardest hit by the new signs of
trouble spreading to Latin America.
''The psychology of the Colombia devaluation yesterday started creeping into the market today,''
said Arthur Hogan, chief market analyst at Jefferies & Co.
''Everyone was just starting to talk about Russia. That Colombia devaluation reeks of global
economic slowdown moving to Latin America,'' he added.
Blue chips closed off day lows thanks to a last-minute recovery that slashed losses. The Dow ended
down 100.15 points, or 1.29 percent, at 7682.22. The Nasdaq composite fell 20.99 points, 1.32
percent, to 1571.86.
The S&P500 lost 8.21 points to 982.26. The Russell 2000 index of smaller stocks fell 6.36 points,
1.80 percent, to 346.29. Declines outpaced advances 2-1 on the Big Board on very heavy volume
of 878,846,470 shares.
Brazil's key share index closed down 8.61 percent, at a two-year low, after Moody's Investors
Service downgraded the country's credit ratings.
Venezuelan shares fell 7.5 percent after Standard & Poor's rating agency said the bolivar currency
was ''extremely'' overvalued and a devaluation is likely in the coming months.
The Venezuelan market was also hurt by news late Wednesday night that the government's third
attempt at privatizing its troubled aluminum sector had failed.
Argentine shares closed about 6.0 percent lower.
Moody's said it may cut Argentina's long-term foreign currency country ceiling for bonds and notes
and long-term foreign currency country ceiling for bank deposits.
''People are definitely starting to wonder when this is going to crack in Latin America,'' said Paul
Rich, a trader at BT Brokerage.
The already battered U.S. banks were particularly vulnerable to bad news in their own backyard.
''As long as it was just Russia and Asia, banking losses were limited,'' said Hogan. ''But if the
economic problems move into Latin America, that could start to run into some money.''
Citicorp (CCI - news) shares plunged 9-3/4 to 98-1/2. Chase Manhattan (CMB - news) eased
5-5/8 to 49-1/4. Dow component J.P. Morgan slid 7-1/8 to 88. Bankers Trust (BT - news) lost
7-1/16 to 66-15/16.
Brokerages were also punished. Morgan Stanley Dean Witter (MWD - news) fell 5-1/8 to
53-15/16. Merill Lynch (MER - news) tumbled 4-1/16 to 63-13/16. Lehman Brothers (LEH -
news) fell 4-1/16 to 38-3/8. The Philadelphia Stock Exchange bank index slid 3.20 percent.
Reassuring words from U.S. Treasury Secretary Robert Rubin may have helped lift stocks off their
lows late in the day.
The Dow was down more than 200 points about halfway through the final hour of trade. But it
quickly turned around after Rubin repeated that the U.S. economy continues on a path of solid
growth, low inflation.
Earlier, Rubin said financial turmoil has had some spillover effect on Latin America. He added that
developments in the region were ''profoundly important'' to Washington.
The market opened on a negative note after a further slide in the Russian rouble. There was also talk
that the Russian Duma could be ready to press ahead with impeachment proceedings against
President Boris Yeltsin next week.
''There has been negative rhetoric coming out of Russia all day,'' said Hogan. ''The Russian
government is looking like something closer to the government they had during the cold war.''
Meanwhile, the third-quarter U.S. profit outlook has dimmed because of turmoil in global
economies. The current quarter is now expected to produce profit growth of just 2.1 percent for
companies in the Standard & Poor's 500 index according to research tracking firm First Call.
Technology, transportation and small stocks were all hard hit by the sell-off. But there were a few
pockets of strength.
Drug shares rallied, gold stocks soared with gold prices and oil and tobacco stocks advanced. Wall
Street analysts have been urging selective buying in sectors like drugs and retailers which depend
more on domestic consumer demand.
Among drug shares, Dow component Merck & Co. (MRK - news) added 3-1/2 to 123-1/2.
Tobacco firm Philip Morris (MO - news) gained 9/16 to 42-15/16. Oil services firm Schlumberger
Ltd (SLB - news) rose 1-1/2 to 47-1/4.
The Philadelphia Stock Exchange index of gold and silver shares (^XAU - news) spiked up 12.68
percent. Shares of Barrick Gold (ABX - news) gained 1-1/2 to 15-1/4.
Some retailers also posted gains. CostCo Cos (COST - news) surged 4-7/8 to 49-15/16 after
announcing a six percent increase in same-store sales for the month.
Shares of mammoth chipmaker Intel Corp (INTC - news) gained 1-7/8 to 76-3/4 after Morgan
Stanley Dean Witter raised its earnings estimates for the firm.
The Dow Jones Transportation Average fell 2.89 percent.
''There are pockets of leadership in the market. It is not capitulation,'' said Charlie Payne, head
analyst at Wall Street Strategies. ''Next week when everybody is back, the bulls are going to make
a little noise.''
More Quotes
and News:
Bankers Trust New York Corp (NYSE:BT - news)
Barrick Gold Corp (NYSE:ABX - news)
Chase Manhattan Corp, The (NYSE:CMB - news)
Citicorp (NYSE:CCI - news)
Costco Cos Inc (Nasdaq:COST - news)
GOLD/SILVER INDX (Philadelphia Stock Exchange) (^XAU - news)
Intel Corp (Nasdaq:INTC - news)
Lehman Brothers Holdings Inc (NYSE:LEH - news)
Merck & Co Inc (NYSE:MRK - news)
Merrill Lynch & Co Inc (NYSE:MER - news)
Morgan Stanley, Dean Witter & Co (NYSE:MWD - news)
Philip Morris Companies Inc (NYSE:MO - news)
SCHLUMBERGER LTD (NYSE:SLB - news)
Related News Categories: US Market News
Help
Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is
expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or
delays in the content, or for any actions taken in reliance thereon
See our Important Disclaimers and Legal Information.
|
