Banks, Oils and Techs Lead Stock Market Slide
Wall Street’s sell-off Friday was broad and deep, as three sectors that had led the market higher for much of 1997 all cracked.
Bank, oil and tech stocks were hard hit, helping drive most major stock indexes down 3% or more. The Dow Jones industrial average lost 222.20 points, or 2.9%, to 7,580.42, although it was off 275 points at its low.
The Standard & Poor’s 500 index dove 3% to 927.69. The Nasdaq composite sank 3.4% to 1,503.22.
Meanwhile, selling was heavy across Latin America as well, as those markets reacted to the U.S. decline and to stiffer competition from Asia, as Asian currencies continue to tumble--making that region’s exports cheaper for the rest of the world.
And traders also abandoned many commodities, amid worries that Asia’s woes will sharply slow world demand. Gold fell to a new 18-year low, down $2.60 to $278.50 an ounce.
The sell-off that hit Asian stock markets hard on Thursday continued on Friday, as fears mounted that Indonesia was on the verge of civil strife. Hong Kong’s main stock index, down 3% on Thursday, fell 3.9% on Friday. Singapore’s main index lost 7.1% on Thursday, then 7.4% on Friday.
Tokyo stocks, however, were relatively subdued on both days, with the Nikkei-225 index down just marginally in both sessions, ending Friday at 14,995.10.
Wall Street’s decline began with the opening bell, as investors weighed the potential for U.S. corporate earnings to be hurt worse than expected this year by Asia’s economic mess.
By the close losers swamped winners by 25 to 5 on the New York Stock Exchange in very heavy trading.
“We just don’t know how the Asian crisis is going to affect earnings. There’s a sense of ‘shoot first, ask questions later,’ ” said Sam Stovall, analyst for Standard & Poor’s industry reports.
European and Latin American investors took the same view: Germany’s main stock index sank 2.5%. Mexico’s main index plunged 6% to 4,547.74, and Brazil’s index sank 5.6% to 9,118.
U.S. stocks ignored falling interest rates. Bond yields tumbled amid a continuing “flight to safety.” The yield on 1-year Treasury bills fell to 5.07% from 5.19% Thursday and 5.43% a week ago.
The 30-year T-bond ended at 5.73%, versus 5.84% a week ago.
Among Friday’s highlights:
* Bank stocks were hammered on worries about potential loan losses, should a weakened economy trigger defaults. NationsBank fell $2.38 to $59, BancOne lost $2 to $50 and Citicorp lost $2.75 to $115.
* Energy stocks plunged as crude oil prices dropped 34 cents to $16.63 a barrel, nearly a four-year low, amid rising supplies. Mobil lost $2.13 to $65.31 and Unocal fell $1.75 to $34.31.
* In the tech sector--dependent on Asia for a large portion of demand last year--Intel sank $2.44 to $71.88, Compaq dropped $2.38 to $56.94 and Hewlett-Packard slid $3.19 to $62.
Also, Adaptec added to the earnings jitters. Its stock plummeted 40%, down $14.38 at $21.56, after the company said it was seeing weak North American sales of its personal computer adapter cards.
* Cyclical stocks tied to the economy’s swings were hurt. Alcoa lost $1.75 to $66.25, Dupont sank $2.63 to $54.38 and International Paper lost $2.06 to $42.69.
But many growth stocks also fell, including Coca-Cola, off $2.50 to $64.13, and drug giant Merck, down $3.31 to $102.88. Not a single stock in the 30-share Dow index rose.
Market Roundup, D4
