Dow Can’t Shake Foreign Jitters
Three days of Wall Street calm were washed away in a sea of selling Friday that began in Asia, spread through Europe and hobbled markets in Latin America.
The Dow industrials, at one point down 195 points, came back in late trading to substantially cut the day’s losses. But the frazzled nerves that some had hoped were banished after last week’s violent stock swings were back in force. There was plenty of blame to pass around: Worries about the soundness of economies abroad, new troubles for trade legislation in Congress and renewed inflation jitters at home that were reawakened by a government report that the labor market is even tighter than expected.
“It was a confluence of negatives,” said Anthony O’Bryan, a market analyst at A.G. Edwards & Sons in St. Louis. “We had more than a few excuses to start selling.”
The Dow Jones industrial average closed down 101.92 at 7,581.32, a drop of 1.3 percent, as broader market indicators also fell sharply.
Trading volume was heavy at 569.98 million shares on the New York Stock Exchange.
The retreat snapped three straight days of listless trading that had brought the Dow close to recovering all the ground lost in a frightening Oct. 27 selling spree.
After last week’s gyrations, it was easy to see why investors remained skittish.
The Dow, which plunged a record 554 points on Blue Monday, Oct. 27, rose a record 337 points the next day. After starting this week with an impressive 232-point gain, the average of 30 blue chips then treaded water, rising 15 points Tuesday, adding 3 points Wednesday and dipping 9 points Thursday. Even with Friday’s setback, the Dow was up 139 points for the week and by more than 17 percent on the year.
Trading began on a sour note when Tokyo’s Nikkei index fell more than 4 percent to its lowest level in more than two years. There were sharp declines in Hong Kong and South Korea, as well. European markets also were lower.
But the biggest selloff was in Brazil, with the main index plummeting 10 percent to trigger a trading halt in the afternoon. Shares recovered a bit when trading resumed and finished down 6.4 percent.
Also upsetting traders in the afternoon, when the Dow was at its low, was news of a postponement of a U.S. House vote on “fast-track” legislation to expand President Clinton’s trade treaty-making power.
The dollar climbed to a six-month high against the Japanese yen in the aftermath of the Asian stock market retreat, but dropped to five-month lows vs. the German mark and Swiss franc as traders flocked to safer European currencies. U.S. Treasury bonds, another haven in times of financial unrest, were propped up by the stock market discord. But U.S. inflation worries left bonds with losses on the day.
In broader market indicators, the Standard & Poors 500 Index fell 10.52 to 927.51, the NYSE composite index slipped 6.46 to 487.29, the Nasdaq Composite Index dropped 21.04 to 1602.40, and the American Stock Exchange Index dipped 9.44 to 678.27.