Asia’s Woes, Bearish Talk Send Stocks Down Again

U.S. stocks closed broadly lower Thursday on continued gloom out of Asia and a big Wall Street bull’s conversion to the bears’ camp.

But bond yields also slid, and the dollar rallied.

The Dow Jones industrials sank 110.91 points, or 1.4%, to 7,846.50 as losers topped winners by nearly 2 to 1 on the New York Stock Exchange in active trading.

The Nasdaq composite index of mostly smaller stocks lost ground for the seventh time in the last eight sessions, tumbling 24.18 points, or 1.6%, to 1,523.19.

Analysts said rising fears that U.S. multinational companies’ earnings will be slammed by Asia’s economic debacle weighed on the market on Thursday.

Also, the Japan’s stock market fell again overnight, despite the government’s economic-stimulus proposal. The Nikkei-225 index fell 2.3% to 16,161, and dove again in afternoon trading today.

But perhaps most unnerving to some U.S. investors was hearing Ralph Acampora, technical-markets analyst at Prudential Securities, declare that a bear market had already begun on Wall Street.

Acampora, who last summer had been predicting that the Dow would reach 10,000 by mid-1998, said Thursday that the index still could reach 8,600 in the first half of 1998, but then could sink as low as 6,000 in the second half.

“It’s a bear market,” he said. A 10,000 Dow, he added, will have to wait for 1999.

Meanwhile, Barton Biggs, chief strategist at brokerage Morgan Stanley, Dean Witter said in a report that bear markets are likely to begin on Wall Street and in Europe in 1998.

A bear market is typically defined as a decline of 20% or more in major indexes like the Dow. The last bear market occurred in 1990.

Investors are “grossly underestimating” the recessionary effects of the Asian currency and financial crises, Biggs said.

The National Assn. of Manufacturers said Thursday it expected Asia’s deepening crisis and the strong dollar to “significantly” dampen U.S. exports next year.

Despite the predictions of Acampora and Biggs, some analysts noted that many other Wall Street strategists remain fairly optimistic about 1998. Abby J. Cohen, Goldman Sachs’ strategist, this week said she did not foresee a major market decline next year because the U.S. economy remains fundamentally very healthy.

In any case, stocks’ losses on Thursday were again the bond market’s gain, as more investors opted for “safe” securities.

The yield on the 30-year Treasury bond fell back to 5.93% from 6% on Wednesday.

The dollar also rallied as Japanese stocks sank further. The dollar rose to 128.72 yen in New York from 127.08 Wednesday, when it had plunged on news of Japan’s economic-stimulus plan, which includes a major tax cut.

Many analysts doubt that the Japanese plan will be enough to revive the economy.

Among Thursday’s highlights:

* Multinational banks doing business in Asia were hit again, with Bankers Trust down $3.81 to $121; Chase Manhattan down $2.94 to $109.06; and Citicorp down $2.38 at $129.13; and J.P. Morgan, down $3.13 at $118.88.

* Tech issues also suffered, with Microsoft falling $4.56 to $131.06 as the antitrust battle with the Justice Department escalates.

Also falling were Dell, down $4 to $80.75; Digital Equipment, down $1.88 to $36.25; Remedy, down $2 to $32.63; Scientific Atlanta, down $2.50 to $16.50; and computer retailer CompUSA, off $4.56 to $26.38.

In commodity markets, wheat, corn and soybeans were lower at the Chicago Board of Trade on concerns that the bankruptcy filing by Japanese grain firm Toshoku Ltd.--the fourth-largest bankruptcy in postwar Japan--could point to trouble at other Japan grain firms.

Japan is the largest buyer of U.S. agriculture commodities, taking $10.7 billion worth in fiscal 1997, and traders feared bankruptcies by other grain firms could prompt cancellations of grain that has been sold but not shipped.