Dow Falls 52 Amid Worldwide Selloff; Price of Oil Slips in U.S.
Investors around the world went on a selling binge today, hammering stocks sharply lower on global markets in a computer-driven sell-off sparked by rumors and worries over the oil-rich Middle East.
U.S. oil prices did a turnabout and dropped sharply following a speech by Iraq’s President Saddam Hussein that traders viewed as conciliatory and less provocative than other statements he has made since the Aug. 2 invasion of Kuwait.
Stock prices fell sharply on Wall Street in heavy trading today as investors continued to worry about the prospect of war in the Mideast.
The Dow Jones average of 30 industrials fell 52.47 to 2,603.96, according to preliminary figures.
In the broader market, losing issues trampled gainers by a ratio of nearly 7-1. Volume on the New York Stock Exchange was a heavy 194.63 million shares against 129.63 million in the previous session.
The NYSE’s composite index fell 3.46 to 176.96.
At the American Stock Exchange, the market value index dropped 3.95 to 327.34.
“Everyone’s just very, very nervous here,” said Tony Woodruff, a managing director at Kidder, Peabody & Co.
Several times the Dow fell more than 50 points, each time triggering one of the NYSE’s “circuit breakers” designed to prevent a price free fall. The mechanism bars stock sales connected to index-futures arbitrage until the prices of the stocks involved rise.
In early afternoon trading, West Texas Intermediate crude for September delivery was down 36 cents from Monday’s close to $28.20 a barrel on the Merc after a trading high earlier of $29.08 a barrel.
On the U.S. Gulf Coast cash market, prompt delivery West Texas Intermediate dropped in the space of less than an hour from $28.95 to $28.30 a barrel around 10 a.m. PDT, 25 cents less than Monday’s quote.
Overseas, the reaction to Hussein’s speech was less clear.
On the European cash market, the United Arab Emirates’ Dubai light--the key OPEC crude from the Middle East shipped mainly to the Far East--was up 35 cents to $25.90 a barrel.
Britain’s widely traded North Sea Brent fell 77 cents to $28.65 a barrel.
The securities sell-off began in Europe following unconfirmed rumors that funds from Kuwait Investment Office in Britain had been unfrozen by authorities and were being rapidly liquidated in markets.
Prices fell across the board in London, Frankfurt, Paris and Zurich as jittery investors unloaded holdings for cash. In London, about $18.8 billion had been wiped off the value of shares.
The blue-chip London Financial Times 100-stock index, which fell 20.3 points Monday, tumbled 48.5 points today to 2,108.1.
The closely watched German Stock Index, which lost 30.19 points Monday, fell 87.73 points, or about 5.2%, to 1,549.96--its lowest close since Nov. 24, 1989.
Traders in Frankfurt said stocks fell as foreign investors, in particular from Britain and the United States, sold stocks as worries over the Middle East continued.
In Paris, the French General Index lost 8.89 points; in Zurich, the Credit Suisse Stock Index fell 20.9 points; in Brussels, the broad-based Brussels Index tumbled 236.86 points, and in Amsterdam the CBS General Share Index lost 3.7 points.
Earlier in Asia, stocks on the Tokyo Stock Exchange suffered their fourth straight loss.
