Dow Adds 22 but Most Stocks Slide With Asia
A few blue chips gained ground Monday, but the U.S. stock market overall was broadly lower, tracking another steep decline in Asian stock markets overnight.
Meanwhile, the dollar continued to rise against the beleaguered yen. Bond yields slid to four-month lows as investors turned away from stocks.
On Wall Street the Dow industrials inched up 22.42 points to 8,922.37, but that belied a much worse session for most stocks.
The Nasdaq composite tumbled 32.05 points, or 1.8%, to 1,746.82 as technology shares suffered heavy selling. (Story, D1)
Losers swamped winners by 3,013 to 1,238 on Nasdaq and by 1,841 to 1,209 on the New York Stock Exchange, though trading was subdued.
Asian markets, which have been plummeting since last week on renewed worries about the extent of region’s economic troubles, suffered sustained selling again on Monday.
The Hong Kong market fell 3.6%, leaving the Hang Seng index at 8,612. The Tokyo market fell 2.2%, Taiwan lost 3.8% and Malaysia’s main index fell 3.6%.
“Earnings for companies in Asia will continue to get worse,” said Kevin Logan, senior market economist at Dresdner Kleinwort Benson in New York. “We think there’s more room on the downside.”
Hong Kong’s slumping property market is hurting real estate and construction industries in the region, while the government’s latest actions to end curbs imposed two years ago to end property speculation aren’t seen as enough to bolster the economy.
“It’s going to get worse before it gets better,” said Alvin Owyang, an associate director at OCBC Securities (Hong Kong) Ltd. “The government needs to do a lot more.”
Russian markets also continued to unravel. The benchmark Russian Trading System stock index fell 10.2% to a 20-month low Monday, as the government faces a major cash squeeze.
As happened last week, the declines in Asia spilled into Latin American markets. The Mexican market index fell 2.6% to 4,413.52, as the peso fell to a record low of 8.9 to the dollar.
The flight to quality helped the dollar, which jumped 0.80 yen to 139.70, a new seven-year high.
On Wall Street, investors bought a few blue chips, utilities, telephone stocks and retail issues as they sought investments that might hold up well in a market made volatile by a steepening decline in Asian economies.
The Dow utility index surged 2.5% to a record high.
Technology bore the brunt of the selling. That sector has been ailing as computer orders from Asian economies have dried up. The Morgan Stanley high-tech stock index slumped 2.9%.
“The industry is in oversupply right now and it takes a while to eat through that, and you’ve got Asian demand slowing,” said Gerard Sullivan, manager of the $190-million Franklin Value Fund.
“A few weeks ago, everybody was obsessed with higher interest rates,” said Donald Selkin, chief market strategist at Joseph Gunnar & Co., a New York brokerage. “Now the market’s concern has shifted from interest rates to [corporate] earnings.”
Smaller stocks in general also were weak. The Russell 2,000 index of smaller stocks dropped 1.2% to 451.17, after rebounding somewhat on Friday.
Among Monday’s highlights:
* Intel led techs lower, falling $3.44 to $68.
* Other Asia-exposed stocks losing ground included Disney, down $2.44 to $110.81, and GE, down 50 cents to $82.88.
* Drug stocks didn’t get much of a lift from news of the blockbuster merger of American Home Products and Monsanto. Bristol Myers added 50 cents to $108; Warner Lambert gained 44 cents to $64.25.
American Home rose 94 cents to $49.25, but Monsanto lost 88 cents to $54.50.
* Retail stocks were among the few strong groups, on the hope that consumer spending will stay strong. Wal-Mart jumped $1.38 to $56.50; Kmart gained 69 cents to $20.06.
* In the utility sector, Bell Atlantic surged $3 to $94.63 and PG&E; gained $1.38 to $32.88.
* Some bank stocks gained as bond yields fell. Banc One added 38 cents to $55.50, Wells Fargo rose 94 cents to $362.94 and Wachovia rose $1.13 to $81.19.
Gold prices slumped, with near-term futures losing $4.40 to $287.90 an ounce. Once a safe haven, gold no longer is in demand in times of world crises.
Meanwhile, many European stock markets were closed Monday for a holiday.
Market Roundup, D14