THAT WASN'T SO BAD, WAS IT?
EXPERTS ALREADY SEE CRASH'S
BRIGHT SIDE
The U.S. stock market is now worth $520 billion less than it
was slightly more than a week ago.
The Dow Jones industrial average now languishes more than
800 points, or nearly 10 percent, below its August peak.
And from Wall Street to the hallowed halls of the Federal
Reserve, the experts on the economy and the stock market
are saying it's all for the better.
How can it be? Isn't this money we're talking about?
The losses are quite real, the experts acknowledge - but
come from gains at least partially ill-gotten, they insist with
equal vigor.
And while none of them were particularly pleased by the sheer
ferocity of Monday's record-setting plunge of 554 points a
while and let emotions calm," said Eric Miller, chief strategist
at Donaldson, Lufkin & Jenrette Securities.
Judging by how the market's gyrations grew less severe as
the week wore on, it seems the Asian typhoon that hit these
shores has done its worst and moved back out to sea.
Certainly, the winds have died down. By week's end, the daily
trading volume was still heavy, but well below the astonishing
2.83 billion shares that changed hands in the United States
on Tuesday, a tally that blew away the previous one-day
record by more than a billion.
Even though the overall outlook for the U.S. economy remains
upbeat, it may take months to assess and repair all the
damage, especially the relentless drubbing suffered by the
technology sector, which is considered most vulnerable to the
economic woes gripping Southeast Asia. And again, that's
fine with most market pros.
Miller, like many analysts, asserted that the market had been
cruising for a bruising for some time, that its three-year
dalliance through record territory, so rarely interrupted, was
based on reality, but was hardly realistic.
"Things were so close to perfect that you had to develop
blemishes sometime, and it was remarkable that it was so
long in coming," said Miller. "The playout of problems in
Asia's markets and currencies and banking systems, that's
clearly going to require time, and that's going to be a volatile
backdrop for our market and suggestive that the possibility of
our market going straight back up is not high, and probably
not desirable."
Maybe it's to be expected that Wall Street's finest would try to
put a positive spin on recent events. But even Federal Reserve
Chairman Alan Greenspan, protector of the nation's economic
health, seemed pleased by all the upheaval, almost like a
forest ranger explaining how a devastating fire would set the
stage for new growth.
"Things are less out of line" in the aftermath of the market's
downturn, Greenspan said Wednesday in a scheduled
appearance before Congress. "It is quite conceivable that a
few years hence we will look back at this episode, as we now
look back at the 1987 crash, as a salutary event."
The comparison to 1987 might seem a bit unsettling - and
inappropriate, since a 500-point drop meant 22 percent in
1987 and just 7 percent this past Monday - but consider that
the market has more than quadrupled in value in the 10 years
between Black Monday '87 and Black Monday '97.
And remember, analysts implore, that the Dow is still up 15
percent for the year, and the Standard & Poor's 500 - the
model for many a mutual fund - is up more than 23 percent.
All of which might be a bit comforting when investors open
their monthly brokerage statements in early November and
see the damage the past week has wrought.
On Friday, the Dow rose 60.41 at 7442.08, closing the week
with a loss of 273.33, or about 3.5 percent.
The S&P 500 rose 10.94 to 914.62 on Friday, trimming the
week's loss to 27.02. The New York Stock Exchange
composite index rose 5.31 to 481.14, down 14.62 for the
week.
The Nasdaq composite index rose 23.20 on Friday to
1,593.61 on Friday, ending the week with a loss of 57.31. The
American Stock Exchange composite index rose 4.91 to
675.75 Friday, ending the week 25.43 lower.
The Wilshire Associates Equity Index - which represents the
combined market value of all NYSE, American and Nasdaq
issues - ended the week at $8.865 trillion, down $237.8 billion
from last week's finish. A year ago the index stood at $6.842
trillion.
The NYSE had a record 4.02 billion shares traded for the
week, while the Nasdaq market had a record 4.65 billion. All
U.S. stock markets, including the American and regional
exchanges, recorded volume of 9.57 billion shares.
North America, United States of America, Central United
States, Midwest United States, Missouri
ST. LOUIS POST-DISPATCH
Author: The Associated Press
December 02, 1997 |
