Stocks worldwide tumbled Monday as investors around the globe realized the Asian economic crisis was not over and will sideswipe the earnings of many companies.
However, long-term U.S. bond yields fell further to record lows amid mounting worries about Asia's financial problems.
The Dow Jones industrial average loss of 207.01 points to 8,627.93, the biggest point loss since a 222-point slide on Jan. 9, came after deep slides in several Asian and European markets.
Key stock indexes in both Hong Kong and Bangkok tumbled nearly 6%. Tokyo's Nikkei stock average fell 1.3%. In Europe, Frankfurt's DAX index fell 2.5% and London's FTSE-100 fell 0.9%.
Elsewhere in Asia, South Korea's main index fell 4.8%, the Philippines' fell 4.5%, Malaysian shares fell more than 4%, and Singapore's fell 3.5%.
The selling continued early today, as the Nikkei fell another 1% in early trading. Stocks in many other Asian markets also continued to retreat in early trading today, although the Hang Seng had recovered more than a percentage point by midday.
The 2.3% loss in the Dow represented the fifth-largest point drop ever and sliced this year's gain to 9%. Just a month ago, the Dow was up more than 16% for the year.
Broader stock indicators also tumbled as nervous currency traders sold the Japanese yen down to an eight-year low against the dollar, further complicating efforts to revive Japan's economy, the second-biggest in the world. However, in early Asian trading today, the yen strengthened to 142 yen to the dollar on concern that the Bank of Japan may support the currency by buying yen with dollars.
The Standard & Poor's 500 fell 21.83 points to 1,077.01, and the technology-heavy Nasdaq composite index fell 29.30 points to 1,715.75. S&P-500; index futures, trading in Asia early today, were up slightly at midday.
As usual, the dollar's rise spurred another exodus from Asian stock markets and another flight to safety in the U.S. bond market, where the yield on the benchmark 30-year Treasury fell to 5.57% from 5.66% late Friday. It was the lowest yield for a 30-year bond ever, breaking the 5.65% level that was set last Thursday.
The dollar rose to 146.15 yen in late New York trading, up from 144.72 yen Friday. During trading, the dollar hit 146.57 yen, its highest level since Aug. 24, 1990.
A strong dollar hurts U.S. companies by making their exports more expensive in other currencies and eating away at the value of any revenues those firms manage to generate abroad.
"This nation's powerful business expansion has been led by U.S. export activity, and the stronger the dollar gets, the tougher it is for U.S. exporters," said Tom Madden, chief investment officer for domestic equities at Federated Investors of Pittsburgh.
Meanwhile, by making the return on U.S. investments even more attractive in other currencies, a rising dollar draws even more money away from Asia.
Among Monday's highlights:
* Shares of 3M plunged 6.7% as Monday's biggest decliner among the Dow 30 after the diversified manufacturer warned that its profit is being hurt by the weakness in Asia and the unfavorable exchange rates. 3M fell $5.81--or the equivalent of nearly 25 Dow points--to $81.
* U.S. airline stocks moved higher as oil prices plunged to their lowest levels since 1986. AMR was up $1.63 at $79.31; US Airways added 25 cents at $76.31, and Delta gained $1.06 to $126.13.
* Oil drillers were hard hit by the drop with Ensco International off $2.13 to $17.44, and BJ Services down $2.88 to $24.75.
* Sunbeam lost $2.31 to $15.75 as the struggling appliance maker fired CEO Albert Dunlap.
Market Roundup, D12
WHY MARKETS ARE JITTERY: A1