WSJ:
"STOCKS TUMBLED on Thursday amid an escalating political and economic crisis in Russia. The Dow Jones Industrial Average shed 357.36, or 4.2%, to 8165.99, its third largest point decline. The yield on long-term Treasurys dropped to its lowest in two decades as money shifted out of stocks."
"Dow Industrials Plunge 357 Points Amid Global Rout
By TERRI CULLEN
INTERACTIVE JOURNAL
Stocks plummeted on
Thursday, with the Dow Jones
Industrial Average posting its third
biggest point decline on record
amid fears that Russia's financial
and political outlook is growing
increasingly unstable.
The yield on the bellwether
30-year Treasury dropped to its
lowest level in two decades on
another flight-to-quality rally, while
interest-rate jitters pummeled the
dollar.
The Dow Jones Industrial
Average plunged 357.36, or 4.2%,
to close at 8165.99. It was the
industrial average's third-largest
decline, behind a drop of 508
points on Oct. 19, 1987, and a
loss of 554.26 on Oct. 27, 1997.
The average closed at its lowest
level since Feb. 5.
Thursday's decline put the
industrials down more than 1100
points, or 11%, from its all-time
high of 9337.97 set on July 17,
1998. A loss of 10% or more is
considered to be a "correction" in
market terms.
The Standard & Poor's
500-stock index tumbled 41.68, or
3.8%, to 1042.51 and the New
York Stock Exchange Composite
Index lost 20.74, or 3.8%, to
518.82. Trading volume was
extremely active on the New York
Stock Exchange at 934.7 million
shares, its second-highest ever
behind the 1.2 billion traded on
Oct. 28, 1997.
Losses were most severe for
indexes stocked with smaller
issues. The Russell 2000 index of
small stocks sank 14.32, or 3.9%,
to 366.10 and the Nasdaq
Composite Index lost 81.72, or
4.6%, to 1686.41.
More troubling news out of
Russia shook the global financial
markets. The Russian government
canceled trading in the ruble for a
second day in a row and said the
suspension would continue "for
some time." Amid the crisis,
Communists and their hard-line
allies in the Russian parliament are
demanding that President Boris
Yeltsin surrender at least some of
his sweeping powers. The Kremlin
denied speculation that Mr. Yeltsin
has resigned.
Bank stocks reeled as Republic
New York became the first to put
a price on the fallout from Russia's
financial crisis, reporting Thursday
that losses from investments in
Russia would wipe out its
third-quarter profits. The
18th-largest bank in the U.S. said
it will take a third-quarter charge of
$110 million to cover losses in
Russia, and set aside $45 million
for potential defaults on Russian
loans. Republic's shares skidded 4
5/8 to 45 1/2.
Other big banks also have
exposure to Russia. The Keefe
Bruyette & Woods bank-stock
index shed 43.40 to 699.01. J.P.
Morgan led the Dow industrials
lower, losing 13 1/4 to 104 11/16.
Despite the damage done by
Thursday's sell-off, some analysts
remained unconvinced that the
market has cratered sufficiently to
begin a broad, sustainable
recovery. "I'm still not seeing the
kind of panic selling that would be
indicative of a climactic condition,"
said Eugene Peroni, technical
analyst at Janney Montgomery
Scott. "At this point now, we are
seeing some pretty good
capitulation from the bulls, but
unless we get broadsided by a
positive -- an external catalyst to
get the market moving higher -- I
doubt we've seen bottom."
The turmoil in the global
equities markets sent investors
fleeing to the perceived safe haven
of U.S. Treasurys. The bellwether
30-year U.S. Treasury bond
jumped 3/4 point, or $7.50 per
$1,000 bond. Its yield, which
moves in the opposite direction of
its price, dropped to 5.371% -- its
lowest level since the Treasury
Department started regular
auctions of fixed-maturity 30-year
bonds in 1977.
A pair of U.S. economic
indicators released early Thursday
garnered little attention amid the
global market rout. The U.S.
economy grew slightly faster in the
second quarter than previously
believed, the Commerce
Department reported, but
remained much cooler than in the
first three months of the year.
Meanwhile, a slight decline in
weekly jobless claims indicated
there has been no letup in the
nation's tight labor conditions.
Meanwhile, the dollar slumped
against most major currencies as
worries about a global economic
slowdown heightened speculation
that the Federal Reserve will soon
seek to boost liquidity by cutting
interest rates. Lower rates would
cut into yields on
dollar-denominated assets, cutting
into demand for dollars. Fed policy
makers, who decided last week to
hold rates steady, will hold their
next meeting on Sept. 29.
World-wide, stocks plunged in
dollar terms. The Dow Jones
World Stock Index was down
6.16, or 3.44%, to 172.75 as of 4
p.m. EDT.
In major market action:
Stocks tumbled. On the Big
Board, volume totaled 934.7
million shares, with 2,867 stocks
declining and just 362 advancing.
Bonds jumped. The 30-year
bellwether Treasury bond was up
3/4 point, or $7.50 per $1,000
bond. Its yield, which moves in the
opposite direction of its price, fell
to 5.371%.
The dollar fell. It was at 1.7974
marks and 141.82 yen, compared
with 1.8065 marks and 144.07
yen late Wednesday in New York." |
