Blue Chips End Week on a Slide
Three days of Wall Street calm were washed away in a sea of selling Friday that began in Asia, spread through Europe and hobbled markets in Latin America. Bonds were mixed.
The frazzled nerves that some had hoped were banished after last week’s violent stock swings were back in force. There was plenty of blame to pass around: worries about the soundness of economies abroad, new troubles for trade legislation in Congress and renewed inflation jitters at home caused by a government report that the labor market is even tighter than expected.
“It was a confluence of negatives,” said Anthony O’Bryan, a market analyst at A.G. Edwards & Sons in St. Louis. “We had more than a few excuses to start selling.”
The Dow Jones industrial average tumbled 101.92 points to close at 7,581.32. For the week, the closely watched index was up 139.25 points after tumbling 273 points a week earlier.
The retreat snapped three straight days of listless trading that had brought the Dow close to recovering all the ground lost in a frightening Oct. 27 selling spree.
In the broader market, declining issues outnumbered advances by 2,396 to 532 on active volume of 564 million shares on the New York Stock Exchange.
The Standard & Poors 500-stock index fell 10.52 points to 927.51, the NYSE composite index slipped 6.46 points to 487.29 and the Nasdaq Stock Market dropped 21.04 points to 1,602.40.
U.S. stocks took their cues from Japan, where there was more bad news for Japanese banks, whose balance sheets have been decimated by the stock market tumble.
Japan’s Nikkei-225 closed at 15,836.36, down 697.51 points, or 4.22%. Hong Kong’s Hang Seng index closed at 10,104.50, down 308.06 points, or 2.96%.
London’s FTSE-100 closed at 4,764.3, down 99.5 points, or 2.05%, and stocks in Germany and France also fell sharply.
Brazilian blue chips tumbled more than 6%, with trading suspended at one point, because of fears over Asia.
But Wall Street also moved lower on concerns that unexpectedly strong jobs growth in October could tempt the Federal Reserve Board to raise interest rates at Wednesday’s meeting of the Federal Open Market Committee.
The Labor Department said the unemployment rate fell to 4.7%, from 4.9% in September, and 284,000 new jobs were added, topping expectations of 202,000.
October’s 4.7% unemployment rate was the lowest since October 1973, when the rate was 4.6%.
Also upsetting traders was news of a postponement of a U.S. House vote on “fast-track” legislation to expand President Clinton’s trade treaty-making power.
But the news had minimal impact in the U.S. bond markets.
The price of the benchmark 30-year Treasury bond fell slightly, causing its yield to rise to 6.20% from 6.18% Thursday.
Among Friday’s highlights:
* A profit warning from Western Digital, which slumped $6.63 to $23.63, helped to drive other computer-related shares down. Texas Instruments fell $4.56 to $112.94; Applied Materials fell $1.19 to $35.19; Compaq Computer slid $1.19 to $64.25; Dell Computer fell $2.44 to $78.56; and IBM fell $1.56 to $91.50.
Intel bucked the trend, rising $3.94 to $77.44.
* Bank stocks were also among the big losers, as the foreign market setbacks raised new fears about the soundness of loan portfolios. Wells Fargo dropped $5.06 to $286.13; Citicorp fell $2.75 to $129.13; BankAmerica lost $2.56 to $73.38; and Chase Manhattan slid $2.63 to $117.44.
Market Roundup, D4
