No profits for me in gold. Not yet. But this global currency crisis is not going away in a hurry. It's not just Russia - it's the whole world. This has not fully played out yet IMHO.................
DOW PLUNGES 512; CORP BUYBACKS AWAITED; METZ SEES MORE LOSSES
ÿÿÿÿÿNEW YORK (MktNews) - The Dow Jones Industrials extended their dramatic six-week plummet Monday, plunging 512 points and setting the stage for steep losses in Asian and European equity markets, Market News International reported.
ÿÿÿÿÿThe Dow Jones Industrials, which set a record of 9,337.97 as recently as July 17, fell 512.61 to 7,539.07 or 6.37%. Among the milestones, the Dow broke 7,908, the closing level last year. New York Stock Exchange volume was an extremely heavy 914 million shares.
ÿÿÿÿÿBreadth continued to be dramatically negative, with decliners overwhelming advancers 2,869 to 400. The S&P 500 dropped 69.61 to 957.53 or 7.2%, the Nasdaq Composite dropped 140.46 to 1,499.22 or 8.5%, while the Russell 2000 fell 20.59 to 337.95 or 5.7%.
ÿÿÿÿÿAll DJIA components fell, with most posting losses with four, five and six handles.
ÿÿÿÿÿGlamor technologies led the drop, posting staggering losses across the board. Victims included Cisco down 12 13/16 at 81 7/8, Dell down 18 3/4 at 100, IBM down 9 7/8 at 112 11/16, Lucent down 10 1/16 at 70 15/16, Microsoft down 9 5/16 at 95 15/16, and Netscape down 5 7/16 at 18 1/16.
ÿÿÿÿÿDealers and analysts said the drop in technologies is an especially ominous signal, indicating investor revulsion with the market. "Investors are becoming disenchanted and looking to sell into any rallies," said Michael Metz, portfolio manager at Oppenheimer & Co.
ÿÿÿÿÿMetz, who has been a vocal bear for two years, said the pullback from July's record has plenty more to go. "I'd say we're only halfway through. We're still looking for a bottom."
ÿÿÿÿÿMichael Lyons, chief dealer at Dean Witter, said nerves on the NYSE are frayed and tempers short. "Nobody says anything good. If you have an order to sell, you just sell it and squeeze everybody further."
ÿÿÿÿÿLyons said NYSE specialists, who are responsible for smoothing declines in individual issues, have been taking substantial hits. "A year's worth of profits are gone, just like that."
ÿÿÿÿÿBut Larry Rice, chief strategist at Josephthal Lyon Ross, is hopeful. "We're in the final throes of this mini-panic. I have never seen the market this oversold."
ÿÿÿÿÿRice expects announcements of massive corporate share buybacks -- a key feature of the post-1987 recovery -- to begin on Tuesday. He also expects Wall Street to withstand any oversea panics, benefitting from those international funds and domestic hedge funds which still have cash on hand.
ÿÿÿÿÿFear that weakened demand in Asia will continue to depress profits remained the market's achilles' heel. Economic data on Monday confirmed the worries, as the Chicago purchasing management report showed sharp drops in regional manufacturing activity, while new home sales, despite low interest rates, fell a surprising 1.6%.
ÿÿÿÿÿStandard & Poor's cut Hong Kong's currency ratings and lowered its outlook to negative. China, which has yet to devalue the yuan, may be a next giant domino.
ÿÿÿÿÿ"It's not just Russia and Japan. It's also Latin America, Canada, China. The fundamentals are deteriorating," said Metz.
ÿÿÿÿÿUnfolding international news also weighed on stocks. In a defiant move, North Korea destabilized Asia further by launching a new longer-range ballistic missile over Japan itself.
ÿÿÿÿÿWorries of anarchy in Russia extended into a third week. The Duma, the lower chamber of Parliament, voted overwhelmingly not to confirm Viktor Chernomyrdin as prime minister. Yeltsin, who will begin a two-day meeting in Moscow with President Clinton on Tuesday, did not back down and quickly resubmitted his choice for nomination. --Mark Pender
16:39 EDT 08/31
c 1998 Market News Service, Inc.
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