Stocks Weaken as New Crisis Rattles Asia
Blue-chip stocks were hammered Thursday as the economic crisis in Indonesia shook the Asian region again.
The Dow Jones industrial average ended down 99.65 points, or 1.2%, at 7,802.62.
The Nasdaq composite index lost 6.16 points to 1,555.54.
Most broad-market indexes also suffered sizable losses, although the technology-heavy Nasdaq composite market fell only modestly despite the latest in a stream of profit warnings from Seagate Technology, the leading manufacturer of computer disk drives.
Declining issues outnumbered advancers by a 5-3 margin on the New York Stock Exchange, where trading was heavy again. NYSE volume totaled 652.98 million shares, the second straight session above 650 million and the fourth straight above 600 million.
The Standard & Poor’s composite index of 500 stocks fell 7.95 points to 956.05. The NYSE composite index fell 4.54 points to 501.64. The average share was down 40 cents.
The sell-off on Wall Street overshadowed good news on inflation as the producer price index fell unexpectedly in December, and for 1997 wholesale prices recorded their lowest reading in 11 years.
The yield on the benchmark 30-year bond fell. Rising prices pushed the yield down to 5.74% from 5.78% on Wednesday.
The Treasury met with better-than-expected demand at its auction of $8 billion of 10-year inflation indexed notes. The notes were sold at a yield of 3.73%, below the 3.78% yield forecast by bond traders.
Still, demand for the securities was below the average at the first two sales, based on the number of bids received compared with the amount of debt sold. The ratio of 2.94 at Thursday’s sale compares with an average of 3.79 at the previous auctions. The notes pay a market-determined yield plus an adjustment for the fluctuating consumer price index.
For the second straight day, investors woke up to unsettling developments in Southeast Asia, this time in Indonesia, where financial markets plunged amid fears that the International Monetary Fund will yank a $40-billion bailout package because of the Jakarta government’s failure to implement required reform measures.
On Wall Street, oil and banking stocks were among the hardest hit. So-called cyclical stocks such as Exxon and Ford Motor, whose earnings depend on a strong economy, declined. The “downdraft” from Asia’s economic turmoil is likely to slow the U.S. economy even as rising labor costs undermine profit growth, Federal Reserve Board Gov. Laurence H. Meyer said. Exxon dropped $1.31 to $59.56 and Ford lost $2.06 to $45.06.
The latest turmoil in Southeast Asia failed to rattle several other key markets, however. Tokyo’s Nikkei stock average fell just 0.1%, Frankfurt’s DAX index fell 1.0% and London’s FTSE-100 rose 0.2%.
Among Thursday’s highlights:
* Of the few bright spots in the Dow, AT&T; rose $2.63 to $62.63 after a report, confirmed by the company following the session, that it was buying Teleport Communications Group, a provider of local telephone service in 28 states, for about $11 billion in stock.
* Gold stocks fell. European central banks are likely to announce they sold 500 tons of gold last year in addition to the 825 tons they already disclosed selling, a top industry consulting firm said, adding to expectations for a further slump in the metal’s price.
Barrick Gold fell $1.25 to $16, leading the decline, as the price of bullion fell $2.90 to $281.80 an ounce, its lowest price since the 1970s.
* Gains in computer-related shares helped stocks from sliding further. The slowdown in Asia puts a premium on a computer company’s ability to manage its business and find ways to boost profit, said Ned Brines, a computer industry analyst at $6.7 billion-asset Roger Engemann & Associates Inc. in Pasadena.
Among the gainers were Cisco Systems, up 63 cents to $56.13; Microsoft, 94 cents to $130.50;, Intel, $1.56 to $74.31; Lucent Technologies, 75 cents to $78.75; Tellabs, $1.69 to $55.13; and Sterling Commerce, 38 cents to $37.38.
But Seagate Technology fell $1.25 to $19.38.
* MedPartners plunged $8.17 to $10--a 45% drop--after the manager of doctor practices said it scrapped plans to be taken over by rival PhyCor and warned it may post a fourth-quarter loss. FPA Medical Management, a competitor, fell $1.13 to $16.13.
* Lehman Bros. Holdings rose $2.75 to $52.88 after the securities firm’s stock was added to the S&P; 500.
Market Roundup, D6
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