WALL STREET SLAMMED BY RUSSIAN CRISIS
NEW YORK -(Dow Jones)- Wall Street suffered heavy losses Thursday, with the Dow industrials plunging more than 350 points, as deepening political turmoil and a market meltdown in Russia caused tremors around the globe. Despite several attempts at recovery, U.S. stocks ended at the day's lows.
As the distress in Russia roiled world stock markets, investors sought shelter in the perceived safety of U.S. Treasurys, sending the yield on the Treasury long bond to a historically low level of 5.340%, down from 5.417% late Wednesday. The dollar dropped sharply against the yen and the mark amid growing talk that the Federal Reserve may be forced to cut interest rates in the wake of the economic crises in Russia and Asia.
The Dow Jones Industrial Average fell 357.36 points, or 4.2%, to 8165.99, in its third-biggest point loss ever. Only the 554-point plunge last October 27 and the 508-point drop in the 1987 market crash have been bigger. But in percentage terms, the 4.2% decline didn't even make the top 10.
The Chicago Board of Trade's Dow industrials September futures contract settled down 448 points at 8110. The contract added about 55 points to its loss for the day after trading ended on Wall Street.
Big Board losers swamped gainers by nearly 8 to 1 on volume of 934.7 million shares - the second heaviest trading day ever. Nasdaq decliners overwhelmed advancers by better than 5 to 1 on 959.3 million shares traded, the Nasdaq's fourth busiest trading day.
The Nasdaq Composite index plummeted 81.72, or 4.6%, in its second-biggest point drop ever. Among other broad-market measures, the NYSE index skidded 20.74, the S&P 500 lost 41.60, the Amex index plunged 24.84 and the Russell 2000 index dropped 14.32.
One-third of the stocks in the Dow Industrial Average either set new lows Thursday or were trading near their 52-week lows.
Michael B. Donohue, head technical analyst at Cowen & Co. in Boston, said roughly 877 stocks on the New York Stock Exchange hit new lows Thursday. That's a substantial increase from the 560 stocks that hit new lows on Aug. 5, following a 299-point plunge in the Dow. "I think there's more to go," said Donohue, citing new lows in the Nasdaq Composite Index. "Clearly it's an unhealthy market with the new lows expanding. It's a good time not to be fully invested."
Russia's battered financial markets all but collapsed amid rumors President Boris Yeltsin will resign to let a group including opposition Communists and nationalists try to pull Russia out of its fiscal mess. However, the Kremlin denied that Yeltsin had resigned, as one U.S. television network reported. Russia's main stock index tumbled 17% as the government again canceled ruble trading, sending shock waves through markets around the globe. Japan's stock market tumbled 3% and most European markets lost that much or more. Stocks in Canada fell 6% after the nation's central bank raised rates in an effort to support the crumbling Canadian dollar.
Alfred Goldman, director of technical research at A.G. Edwards & Sons, believes bearish investors are using Russia's woes as an excuse. He believes the U.S. market's reaction to Russia's crisis is extremely overdone. "We do no business with Russia," he said. "But (the U.S. market) is in a correction and that leaves us vulnerable to bad news."
The Dow's dive below 8200 worried several market technicians, and there is some dispute over where the next support level is. Some see no technical support for the Dow until it falls to 7800. But Bob Dickey, technical analyst at Dain Rauscher Wessels, said the Dow should hold at the 8000 level, if it falls that far.
Once again, banking issues reflected investors' fears about the banks' exposure to risky Russian debt instruments. J.P. Morgan lost 13 3/16, Citicorp slid 11 7/8, Bankers Trust tumbled 8 5/16, and Chase Manhattan fell 6 1/8. Republic New York slumped 4 5/8 after the bank warned that problems in Russia would erase third-quarter earnings.
Among other financial issues, Merrill Lynch lost 6 5/16, Morgan Stanley Dean Witter tumbled 6 7/16 and Lehman Brothers skidded 7 1/4, while Dow components American Express and Travelers lost 6 15/16 and 4 1/8, respectively.
None of the 30 stocks in the Dow industrials withstood the sell-off. Among prominent losers, IBM erased Wednesday's strong gain, falling 5 5/8, United Technologies slid 5 1/16, while Alcoa, General Electric, General Motors and Sears fell more than 3 points each.
Even normally safe-haven sectors, such as consumer-products and pharmaceuticals, which had resisted recent weakness, came under selling pressure. Coca-Cola shed 4 7/16 after Merrill Lynch lowered its investment rating, noting the beverage company's heavy dependance on consumer markets world-wide. Avon Products skidded 4 15/16.
Dell Computer, which had remained impervious to the market's recent skid, finally gave ground - easing 3 9/16 atop the Nasdaq most-active list.
Tech sector bellwethers, Microsoft and Intel, also lost more than 3 points apiece.
Cendant was the most active NYSE issue, down 1 3/16 after the troubled marketing company said it will file its restated financial statements a month later than previously anticipated.
But CBS stood out with a gain of 2 1/16 in active trading after the media company said it would seperate its radio business from its lagging television business. |
