Stocks Slide on Wall Street and Overseas
The U.S. stock market was broadly lower on Friday as bond yields rose and as most foreign markets also tumbled--capping a dismal week in equity markets almost everywhere.
After dropping as much as 100 points in early trading, the Dow Jones industrial average closed down 58.26 points at 10,910.96. For the week it sank 2.7%.
On Nasdaq the composite index managed to eke out a 0.3% gain on Friday to 2,692.40. But it lost a steep 6% for the week.
Losers topped winners by 19 to 10 on the New York Stock Exchange on Friday and by 22 to 16 on Nasdaq, though trading was light.
Profit-taking slammed markets around the world this week, as some investors took money off the table amid jitters over U.S. interest rates, a tumbling dollar and tensions between China and Taiwan.
The British market fell 5.4% for the week, German stocks lost 5.5%, Japanese shares fell 3.9% and the South Korean market dove 11.4%.
Despite strong second-quarter earnings reports from many U.S. companies, analysts said the numbers were being overshadowed by the reality of sky-high stock valuations and Federal Reserve Chairman Alan Greenspan’s warning Thursday that the Fed might still raise interest rates further to cool the economy.
“After Greenspan’s speech, many believe that the Fed may be more aggressive than expected,” said Alan Ackerman, analyst at Fahnestock & Co. The Fed meets Aug. 24.
U.S. bond yields rose on Thursday and again on Friday, with the 30-year Treasury yield ending at 6.01%--up from 5.96% Thursday and the first close above 6% since July 7.
Still, many analysts say profit-taking in U.S. stocks is more a function of stocks’ great run again this year. The Nasdaq index, for example, is still up 22.8% year-to-date.
In other trading Friday, the dollar continued to fall against the resurgent yen, ending at 116.55 yen--near a five-month high and down from 120.97 a week earlier.
The yen is gaining on expectations international investors will continue to buy the currency to purchase Japanese stocks. But Japan’s market sank 1.1% on Friday. A stronger yen means trouble for Japan’s exporters.
Among U.S. market highlights:
* Banks and brokerages fell on interest rate worries. Chase Manhattan sank $1.75 to $81.56 and Merrill Lynch lost $2.31 to $71.69.
* Major tech stocks, hammered earlier in the week, showed strength. IBM added 94 cents to $124.81 and Dell rose $1.38 to $41. Also, Gateway soared $10.13 to $73 after the company reported a 47% surge in second-quarter earnings.
And Sun Microsystems jumped $3.19 to $70.38 after saying its quarterly profit grew 30%.
* In the Internet sector, Amazon.com rebounded $7.38 to $114.56, but America Online dipped $2.56 to $107.94 and Yahoo added just 63 cents to $145.75.
* Among new offerings, Redwood City, Calif.-based InsWeb, an Internet insurance marketplace, zoomed $14.56 to $31.56 in its first trading day, giving the company a market value of $1.1 billion.
But Los Angeles-based JFax.com, which allows people to manage their faxes and voicemail from an e-mail box, was unchanged at $9.50 in its debut.
* Visx surged $5.25 to $101.75 and Summit Technology soared $2 to $20.50 after federal advisory panels said their vision correction lasers should be approved for wider use. But Sunrise Technologies’ stock plunged $11.28 to $3.72 after those panels voted against its laser treatment.
Market Roundup, C4
