Wednesday's nearly 100-point decline in the Dow Jones industrial average was part of a broad and fierce market sell-off that included cyclical, financial, global and consumer issues. Technology stocks made a stab at recovering from Tuesday's sharp drop but ended Wednesday's session mixed.
Meanwhile, the price of gold punched through the $400-an-ounce barrier, hitting the highest level since August 1993, as worried stock market investors bought up the precious metal amid the stalled federal budget talks.
In active trading on New York's Commodity Exchange, the pacesetting February gold contract closed at $400.20 an ounce, up $3.30 from Tuesday's close, after climbing $6.10 early in the day to $403.00. The Comex spot contract for January closed at $399.70, up $3.50.
Bond yields rose sharply on the lack of progress in the budget negotiations. The yield on the 30-year Treasury bond rose to 6.19% from 6.11% on Tuesday.
The Dow industrials dropped 97.19 points to 5,032.94, or 1.89%, for the biggest one-day point decline since Dec. 18., when the index shed 102 points.
The market was spared a greater loss by buying in selected technology stocks that were battered Tuesday when a brokerage house issued a "sell' recommendation on some high-tech shares, traders said.
The Nasdaq composite index, laden with tech stocks, slipped 8.60 points to 990.21 after Tuesday's collapse of 34 points.
Technology stocks ended mixed overall, with Motorola off 3 5/8 at 49 7/8. The company, a powerhouse in the sector, reported after Tuesday's market close a 16% drop in fourth-quarter earnings.
"Some investors may be taking Motorola's results as an early harbinger of technology earnings yet to come. But I think it will be a mixed bag, and some analysts are fine-tuning estimates up for IBM, which reports next Thursday," said Marty Kearney, a trader at PTI Securities. IBM rose 1/2 to 87 1/4.
Apple Computer said after the close that it expects to report an operating loss for its fiscal first quarter and plans to restructure its business. Apple said it expects an operating loss of $68 million before restructuring charges.
Apple stock, which rose 1 1/2 to 34 1/4 in the regular Nasdaq session, dropped to 32 in after-hours trading.
Seagate Technology's second-quarter results exceeded analysts' estimates, and the shares rose 1 1/8 to 47 3/4. Microsoft rose 2 3/16 to 82 3/8. Morgan Stanley upgraded the stock, a market source said. Intel lost 7/8 to 54 1/8 in Nasdaq trading.
Shares of gold mining companies rallied with the price rise in bullion. Newmont Gold rose 2 to 52 1/2 and Newmont Mining rose 1 3/4 to 54 3/8.
Gold's last foray to the $400 level, in 1993, was fueled by billionaire George Soros' entry into the market in the spring of that year, which boosted the metal that August by more than $80.
Gold had languished just below the key psychological threshold of $400 through 1995, but the new year has brought a revival of speculative interest, against a background of good demand for the metal.
Gold is widely seen as a safe haven for investors in times of economic uncertainty, and the increasingly bitter dispute between the White House and Congress in balancing the budget has jolted the stock market, fueling purchase of the metal.
Among other market highlights:
* Dun & Bradstreet rose 1 5/8 to 65 on news that it will split into three companies.
* Allstate fell 1 3/4 to 38 3/8. Duff & Phelps lowered its opinion of the stock on the belief that the auto insurance business will begin to deteriorate in 1997.
* Transportation stocks continued to fall after the blizzard that has crippled East Coast airlines and over-the-road transport. The Dow Jones transportation average fell 48.08 points, or 2.47%, to 1,898.48. Delta Air Lines skidded 2 3/8 to 69 5/8.
* Oil shares, which had been rising on higher oil prices, were not spared Wednesday's sell-off. Exxon fell 2 1/2 to 80 1/4, Chevron lost 2 1/8 to 53 and Texaco slid 1 1/4 to 78 3/4.
Meanwhile, foreign stock markets responded to Wall Street's sell-off by pushing their own shares lower. London's FTSE-100 index fell 28.8 points to 3,671.5. Frankfurt's 30-share DAX index ended down 11.47 points at 2,338.19. Tokyo's 225-share Nikkei average finished down 39.76 points at 20,612.32.
Oil and natural gas prices retreated, despite cold weather up and down the East Coast.
* PANIC ATTACK
Budget stalemate, slow economy rattles stocks. A1
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Near-term gold futures prices per ounce on Comex, monthly closely except latest:
Wednesday: $399.70, up $3.50
Source: Bloomberg Business News