Stocks Fall Worldwide; Bonds Rally
Global equity markets suffered steep losses Monday, with jitters over corporate earnings prospects unnerving investors worldwide.
Meanwhile, the dollar continued to soar against the Japanese yen on Monday, but early today in Tokyo it pulled back.
The U.S. bond market was the day’s big winner, as yields tumbled sharply.
On Wall Street, the Dow Jones industrials fell 96.55 points, or 1.1%, to 8,786.74. After drifting for much of the day the market sold off in the last hour.
Smaller stocks continued to bear the brunt of the selling, with the Russell 2,000 index of smaller shares sinking 1.5% to 413.36--its lowest close since mid-January.
Overall, losers swamped winners 2,110 to 957 on the New York Stock Exchange and 2,875 to 1,295 on Nasdaq, in active trading.
“It’s not a happy pattern to see selling at [the] close,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman & Co.
Procter & Gamble led blue chips lower, falling $3.13 to $76.25. The stock has slumped 13% since Thursday, when the company warned of weaker earnings growth in the second half of this year owing in part to Asia’s depressant effect on results.
Meanwhile, in Hong Kong on Monday, the Hang Seng stock index plunged 4.8% to 7,552.77 as investors anticipate the worst corporate earnings season for Hong Kong companies in more than a decade.
Selling also hit Europe, where stocks have been red-hot this year. The main German stock index slumped almost 2%. French shares also dropped about 2%.
In Tokyo, the Nikkei-225 stock index lost 1.3% to 16,165 on Monday as the dollar neared 146 yen, an eight-year high. The dollar continued to advance in New York, rising almost 1 yen to 145.60.
But in Tokyo early today, the dollar fell back to 144.54 yen after Finance Minister Kiichi Miyazawa suggested the government might sell dollars to prop up its battered currency--reversing his hint last week that no intervention was imminent.
As U.S. investors dumped stocks, some bought bonds. The yield on the bellwether 30-year Treasury bond fell to 5.65%, down from 5.71% on Friday and the lowest since July 23.
The National Assn. of Purchasing Management said its index of U.S. factory activity fell to 49.1 in July from 49.6 a month earlier, a bigger-than-expected decline. At the same time, its index of prices paid, an important inflation gauge, fell to a 15-year low.
The reports hinted of slower economic growth--good for bonds but potentially worrisome for stocks as investors focus on already disappointing corporate earnings.
Among Monday’s highlights:
* Energy stocks added to their steep losses this year as crude oil prices fell further. Exxon lost $1.75 to $68.50, Transocean Offshore slid $1.81 to $37.63 and Texaco dropped $1.88 to 58.31.
* Blue-chip losers included Eastman Kodak, down $2.38 to $81.50; McDonald’s, down $2.19 to $64.63; and Merck, down $2.06 to $121.50.
* By contrast, major tech stocks held up well, as Intel gained 38 cents to $84.81, Dell Computer added 59 cents to $109.19 and IBM added 25 cents to $132.75.
* German software giant SAP made its debut on the NYSE, closing at $59.56.
* Bergen Brunswig plunged $7.88 to $45.13 and AmeriSource Health tumbled $20.13 to $56 after a judge on Friday blocked Cardinal Health’s purchase of Bergen and McKesson’s acquisition of AmeriSource, saying the transactions would probably reduce competition in the U.S. pharmaceutical distribution industry.
* Some investors flocked to the relative safety of electric utility stocks. American Electric Power rose $1.13 to $44.06; PG&E; gained 63 cents to $31.06. Lower bond yields also helped the stocks.
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Market Roundup, D18
