Stocks swung wildly Friday, the busiest day in U.S. market history, with the Dow industrials tumbling an additional 132 points amid a crush of confusion over how an Asian financial crisis will affect American companies.
The Dow Jones industrial average changed course three times after an opening rally, gyrating nearly 450 points during the session before closing at 7,715.41, down 132.26 for the day.
The drop gave the Dow a two-day loss of 320 points, or about 4 percent. But because of a rally earlier in the week, the famed blue-chip index has lost just 131.62 since Monday morning.
Broader stock measures also shot higher at Friday’s open before extending Thursday’s slide, which was sparked by a stunning selloff in Hong Kong that rippled throughout Asia and financial markets around the globe.
The sudden crisis in Hong Kong, a financial powerhouse, reignited fears about the region’s shaky economics, which began unraveling during the summer amid the strain of mounting trade deficits that sent local currencies plunging.
While only a small portion of U.S. exports go to Southeast Asia, the potential dropoff in foreign revenues has left many investors wondering whether multinational conglomerates, like the 30 companies in the Dow, would continue to merit their lofty stock prices.
Foreign markets began bouncing back Friday morning after Hong Kong’s main stock index, which slid a shocking 10 percent on Thursday, mounted a partial rebound.
But with none of the question marks about Southeast Asia resolved, many Wall Street investors used Friday’s early gains to pull more money out of stocks.
“The market’s just saying, ‘Hey we haven’t fully discounted this uncertainty from Asia,” said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons of St. Louis. “But the thing that kills a bull market is our own economy,” rather than overseas financial trouble.
After opening the day with a 92-point gain, the Dow tumbled to a 122-point deficit by midday, trimmed that loss to 21 points, and then plunged again to a loss of 152 points before recovering slightly.
“If the Asian markets do slow world growth, it certainly will have an affect on U.S. companies,” said Robert Freedman, chief investment officer for the John Hancock Funds in Boston, downplaying the significance of Friday’s action.
“But it’s pretty difficult to make a judgment that things have changed a whole lot between this morning and this afternoon for most companies,” he added. “So there was a lot of psychology going on there. It’s obvious that short-term traders were making bets” before the weekend.
Computer-related sectors, which have a much larger exposure to Asian markets, gave up the most ground, with the technology-heavy Nasdaq composite index sliding 20.33 to 1,650.92.
Those measures dominated by smaller companies, which generally do less overseas business, fared better than the Dow or the Standard & Poor’s 500-stock list, which fell 9.05 to 941.64.
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