Stocks Slide, Yields Fall on Global Woes
Heavy selling in emerging stock markets worldwide on Monday, and an antitrust suit against giant Microsoft, set a poor tone for Wall Street, where the broad market closed lower for a sixth consecutive session.
But U.S. trading was thin ahead of today’s Federal Reserve Board meeting. Bond yields fell.
The Dow Jones industrials lost 45.09 points, or 0.5%, to 9,050.91, after trading as low as 8,999 in late afternoon. The Dow now is off 1.7% from its record high of 9,211.84 set last Wednesday,
Most broader indexes suffered modest losses as well on Monday. The Standard & Poor’s 500 eased 0.3% to 1,105.82. The Nasdaq composite lost 0.8% to 1,831.62. The Nasdaq index now is off 4.5% from its recent record high.
Losers topped winners by 21 to 10 on the New York Stock Exchange and by 2 to 1 on Nasdaq. But NYSE volume was a mere 520 million shares--the lowest since late March.
“The market is looking for reasons to be nervous ahead of the [Fed’s] Federal Open Market Committee, even if the consensus is there should be no move on rates,” said Robert Froehlich, chief investment strategist at Scudder Kemper Investments.
“It’s tough to quantify ‘What does Asia mean?’ and tough to quantify ‘What does the Microsoft lawsuit mean?’ and so you tend to overreact,” Froehlich added.
Asia’s devastated markets were mostly sharply lower on Monday, led by Indonesia’s 4.2% drop as social unrest continued. Latin American markets took even bigger hits. But Tokyo stocks bucked the trend, gaining 0.9% even as the dollar soared to a 6 1/2-year high versus the yen, topping 136 yen.
The strong dollar may have helped the U.S. bond market to calm down even as stocks slid. The yield on the 30-year Treasury bond fell from 5.97% on Friday to 5.92%, lowest since April 20.
Among Monday’s highlights:
* Microsoft tumbled $3.38 to $86.06 as the government filed suit against it on anti-trust grounds. Many other tech issues also fell, including Intel, down 94 cents to $79.38; Apple Computer, down $1.06 to $28.50; Hewlett-Packard, losing $3.31 to $66.13 after last week’s poor earnings report; and even Microsoft arch-rival Netscape, down 69 cents to $27.25.
But Dell Computer bucked the downward trend, rising $4.50 at $94.50 in advance of its earnings report today.
* U.S. traded shares of Latin American companies were hit hard, tracking big declines in their home markets, as jitters over Asia’s economic crisis rippled into other developing markets.
The Brazil Fund fell $1.06 to $20.06 as Brazil’s main market index sank 6.4%. Also on the NYSE, TelMex dropped $2.13 to $50.44, Telebras sank $8.31 to $108.13 and Argentine oil company YPF lost $1.50 to $33.50.
* Commodity producers slid with another decline in key commodity prices. Copper giant Phelps Dodge lost $1 to $61.56; lumber company Weyerhaeuser slumped $1.38 to $56.38; gold miner Barrick Gold fell $1 to $20.88.
* Some classic growth stocks found buyers, amid a general “flight to safety.” Merck rose $2.88 to $119.63, Pfizer surged $6.06 to $110.69, Coca-Cola added 50 cents to $77.38 and Procter & Gamble gained $2.56 to $84.50.
* Among biotech issues, Genetech rose $2.38 to $72.38 and EntreMed jumped $3.63 to $36.63 on optimism about their experimental anti-cancer drugs.
* Among Southland issues, FPA Medical continued to sink on news of massive losses. The stock fell $1.30 to $4.70 on Nasdaq.
Market Roundup, D16
