Seems like only yesterday...
>>By The Associated Press
NEW YORK (AP) -- A year later, it's clear that the scary 554-point
plunge taken by the Dow industrials didn't mean the end of the world, or
even the bull market.
But while a record-setting rebound has helped ease the sting of the huge
drop last Oct. 27, the irritants behind that sudden selling frenzy are
hardly a thing of the past.
Trading was halted twice that day as the Dow Jones industrial average
tumbled, setting off two ''circuit breakers'' for the first time since
they were created in reaction to the ''Black Monday'' crash of 1987.
The 1987 crash of 508 points, which had occurred almost exactly 10 years
before last October's selloff, did three times as much damage in
percentage terms, knocking down the Dow 22.6 percent.
But the 554 points lost on Oct. 27, a record for one session, clearly
shook people up, threatening an end to one of the most lucrative bull
markets in history.
While a lot has happened since then -- a trail of record highs from
February through July and another 500-point plunge on Aug. 31 -- the
story remains much the same a year later.
In effect, the selling frenzy that took hold in October 1997 was merely
the beginning of a feeble attempt to quantify the impact of economic
crises in faraway places. Just as the Dow was cresting at 9,337.97 on
July 17, the sickly finances crippling Asia were beginning to infect the
Russian economy.
Thanks to a 1,000-point rally over the past few weeks, the Dow is
trading near 8,400. But as recently as Oct. 8, the famed market
barometer was flirting with 7,400, only about 400 points above the lows
set a year ago.
And still, there's no clear resolution to how long and how much the
economic instability will hurt profits at American companies.
Fears of recession abound, and for good reason. The latest data shows
that U.S. factories continue to be hurt by weak export demand. The
threat of job cuts, as well as the psychological impact of all the
gyrations in the stock market, have clearly begun to erode consumer
confidence.
But on the positive side, the Federal Reserve has lowered interest rates
twice in the past month, bolstering hopes that the central bank will
steer an increasingly sluggish economy to another ''soft landing.''<<
We'll see how soft. |
