Stock Drop Looks Grimmer on Campaign Trail Than in Corporate Suite

From the corporate suite, most executives played down the long-term significance of Wall Street’s tumble Friday. But on the campaign trail, presidential hopefuls took a much dimmer view of the situation.

Although Republican presidential candidates weren’t available for comment, their Democratic counterparts had plenty to say about the 140.58-point plunge in the Dow Jones industrial average.

“Today’s dramatic fall in stock prices is further evidence that the corporate establishment is more interested in profit taking than economic stability,” said Missouri Rep. Richard A. Gephardt, campaigning in Iowa.

“Only a fundamental change in direction will bring stability to Wall Street and renewed prosperity to the heartland.”

Speaking in Rochester, N.H., Illinois Sen. Paul Simon said: “The skittishness on Wall Street and Main Street will continue until we get our economic house in order.”

Through a spokesman, Massachusetts Gov. Michael Dukakis said: “In October, the national alarm clock went off. How many times are we going to push this news button? Our leaders in Washington have yet to devise a credible program for rebuilding our economic strength and until they do, families and investors have good cause to be dissatisfied.”

Former Arizona Gov. Bruce Babbitt, campaigning in New York, said, “The weather on Wall Street is nasty because we’ve been getting a snow job from our elected leaders on the deficit.”

But business leaders, for the most part, took the news in stride.

“I don’t think there’s any particular significance to one-day fluctuations in the market,” said Philip M. Hawley, chairman and chief executive of Los Angeles-based Carter Hawley Hale Stores, owner of the Broadway and four other department store chains.

“The more important thing is what happens over the next several weeks and months in terms of the outlook for the economy and the potential impact on consumers’ and investors’ confidence levels,” he added.

American Telephone & Telegraph’s chief economist, Kenneth Militzer, also played down the drop, noting that although the decline was the market’s third worst in terms of the points lost on the Dow, “percentage-wise it was not nearly the third-worst” decline.

“In our economic forecast,” Militzer said, “we assumed a trading range between 1,800 and 2,100, and as the Dow got closer to 2,100 we wondered if things were going to be better than we thought. So, this only puts it back in that (forecast) trading range.

“All along we had been expecting a lot of volatility.”

In Chicago, William L. Weiss, chairman and chief executive of Ameritech, one of the seven so-called Baby Bell phone companies carved out of AT&T; four years ago, said his firm’s Midwestern local phone service and other businesses “remain sound, and we’re confident about the future--despite the unprecedented volatility in the stock market.”

Some business officials even looked upon the drop in the stock market as serving as a safety valve.

Harry G. Bubb, chief executive of Pacific Mutual Life Insurance in Newport Beach, called the market drop a necessary and “not illogical” continuing correction to the sharp run-up over the last year.

“You’d rather have a series of 3.5 earthquakes than one big 8.0,” he said. “A series of corrections of this magnitude could forestall a far more dramatic correction later on.”

Richard O’Brien, chief economist for Hewlett-Packard, said, “When you get down to it, the market just gave up the gains of the first four days of the year and is back where it was a week ago Thursday. So I’m not too concerned about the numbers.”

Some business executives, however, were concerned about the sharp setback on Wall Street.

John Markovich, treasurer of Western Digital, an Orange County electronics firm, was quite worried that the persistent gyrations in the market will prevent growing cash-starved companies from issuing stock to expand.

“It’s pretty disturbing,” Markovich said. “Over the last couple of weeks there’s been enough news to convince people that the economy isn’t going to fall off the cliff. Fundamentally, what changed from Monday to Friday? Nothing for the worse and several things for the better. All this does is convince me that there are a lot of very edgy investors out there.”

Times staff writers Maura Dolan, Martha Groves and Carla Lazzareschi also contributed to this story.

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