U.S. Stocks’ Frenzied Fall Across Board Sets New Lows

Stocks ranging from banks to multinationals were pummeled in Monday’s historic stock plunge, which saw a 7.2% decline in the Dow Jones industrial average that forced two trading halts.

Concern that slumping Asian economies would hurt U.S. exporters undercut the rally that sent stocks to records this year.

The Dow industrials fell 554.26 points to 7161.15, led by Merck and J.P. Morgan. In the broader market, the Standard & Poor’s 500 declined 64.66 points, or 6.9%, to 876.98. Apple Computer was the only stock in the S&P; index to rise.

Even with two breaks in trading on the New York Stock Exchange, it was the busiest day ever on the Big Board, as 685.5 million shares changed hands.

The Dow’s decline was so widespread that only 158 of the 3,397 stocks on the NYSE showed a gain. Other U.S. stock markets also shut down, as were equity options and futures exchanges. Stock markets in Mexico and Canada followed suit.

Multinational companies dropped on concern that overseas profits may lag. General Electric dropped $4 to $61.94, Caterpillar fell $5.13 to $52.81 and General Motors dropped $4.06 to $64.

Shares of big banks dived as investors fled from companies whose assets could suffer from Asia’s economic woes. Citicorp, the most global of the nation’s banks, tumbled $13.31 to $123.31. About 23% of Citicorp’s 1996 income came from Asia.

J.P. Morgan, which drew 15% of last year’s profit from Asia, fell $7.94 to $108.

“Investors are worried that instability in the Far East will cause earnings for many U.S. multinational companies to be negatively impacted,” said Stanley Nabi, vice chairman at Wood Struthers & Winthrop in New York, which oversees $13 billion. He said the rout could extend to as much as 12% before stocks resume their climb.

The Nasdaq composite index, packed with computer and communications issues whose profits may be most affected by a slowdown in Asian economies, suffered its worst one-day point drop ever, falling 115.78 points, or 7%, to 1535.14.

“There’s a lot of uncertainty out there,” said Brian Finnerty, co-head of capital markets at Unterberg Harris in New York. “People are confused and scared.”

Oxford Health Plans paced the market’s decline, tumbling $42.88 to $25.88 after it forecast a third-quarter loss. The stock lost about $3.35 billion of its value, and went from having a 17% gain for the year to a 56% loss.

The Dow average is now down 13% from its Aug. 6 record of 8259.31, marking the first 10% decline from a high since 1990. Yesterday, it was down 6.6% from the high.

Year to date, the Dow is up about 11%. On Aug. 6, it was up 28%.

Merck fell $8.38 to $85. Patents on drugs accounting for one-quarter of Merck’s sales will expire in 2000 and 2001, and Christina Heuer, an analyst at Smith Barney Inc., cut the firm’s investment recommendation on the drug maker. Earlier this month, the company’s third-quarter earnings fell short of forecasts.

The day’s most active stock was Oxford Health Plans, as more than 49 million shares changed hands. Other health-care stocks slumped on Oxford’s warning that it will have to set aside about $47 million to $53 million to boost reserves for medical claims.

Foundation Health Systems fell $2.25 to $29.75, United Healthcare slid $8.56 to $43.06, PacifiCare Health Systems dropped $5.25 to $62.50, Health Care & Retirement fell $1.88 to $36.88 and Wellpoint Health Networks tumbled $8.38 to $47.50.

Semiconductor stocks tumbled for a second session after Intel said it was postponing the opening of a $1.3-billion plant because of flagging demand for some of its chips.

The Philadelphia Semiconductor Index dived 9.8%, as Texas Instruments fell $9.13 to $102.75, Novellus Systems dropped $5.13 to $43.25 and Intel slumped $5.25 to $74.75.

Earlier, in Hong Kong, the benchmark Hang Seng index fell 5.8% as investors speculated that last week’s jump in the territory’s interest rates will erode corporate profits and strangle economic growth.

Japan’s Nikkei-225 index dropped 1.9% to 17,038.36 points, extending its loss for the year to 12%. Britain’s FTSE-100 index dropped 2.6%, France’s CAC-40 index slumped 2.8% and Germany’s DAX-40 index fell 4.2%.

The dollar suffered its worst drop against the German mark in 2 1/2 months Monday and lost its entire day’s gains to end flat versus the Japanese yen after the U.S. stock market’s record plunge.

In furious trading, the dollar also tumbled to a three-month low versus the British pound after Britain said it would not join Europe’s planned common currency in 1999.

The dollar also rose sharply against the Mexican peso as financial worries spilled into Latin American markets. The dollar hit an intra-day high of 8.65, its strongest since the peso’s December 1994 devaluation.

Gold, silver and energy prices rose in a wild day of commodity trading marked by communications outages and winter storms as well as investors seeking refuge from a free fall in Wall Street stocks.

Those gains buoyed overall commodity indexes but many commodity prices fell, with speculators exiting the markets in a period of uncertainty sparked by continued worries about economic turmoil in East Asia, a key U.S. export market.

Grain, soybeans, cotton and lumber prices fell.

December gold at the Comex in New York ended up $3.70 at $312.30 an ounce.

and December silver rose 50 cents to $4.79 an ounce.