Stocks Hit Another Rough Spot, But No Tailspin Uncertain Economy Of Pacific Rim Leads To Another Tough Day For Technology Stocks

Wall Street ran into trouble again Thursday, but avoided another tailspin in the latest round of global financial tag, leading many experts to conclude that the worst is over for U.S. investors.

The Dow Jones industrial average fell 125.00 points to 7,381.67 after briefly bobbing into positive territory around midday.

Even with the decline, it was the second straight day without any of the monumental mood swings that had gripped the market over the past week, when the Dow tumbled 875 points in just three sessions, including a 554-point plunge on Monday that shut down the stock exchange.

But the economic uncertainties of the Pacific Rim continued to weigh heavily on the shares of U.S. technology companies, which do more business in Asian markets than U.S. multinationals from other industries. The technology-heavy Nasdaq Stock Market suffered the day’s biggest losses, falling 2 percent.

“People are having a difficult time getting a clear idea about each company’s specific exposure to Asia,” said Robert Streed, senior investment adviser at Northern Trust in Chicago. “We know technology companies have more exposure, so technology companies are being painted with a broad brush. They rounded up the usual suspects and took them out to shoot them this morning.”

Trading was hectic again with an estimated 1.60 billion shares traded on all U.S. markets, but slowed further from the breakneck pace seen Tuesday, when a record 2.83 billion shares changed hands, and Wednesday, when 1.86 billion were traded. Before this week, the one-day volume record for all U.S. markets was about 1.7 billion shares.

The fact that there have been no more substantial drops amid all the heavy volume was taken as a sign that the selling jitters probably climaxed during Monday’s rout.

“I think we have seen our lows,” said Bob Dickey, managing director of technical analysis at Dain Bosworth in Minneapolis.

“Investors have had great reason for selling stocks, and they’ve pretty much done their dirty deed,” said Dickey. “Anybody who would be worried enough to sell on the international crisis has done so, and that’s why we’re seeing the market firm up.”

In Hong Kong, where the global financial crisis began last week, the main stock market index fell 3.7 percent Thursday after rebounding 19 percent on Wednesday. The Japanese market fell 2.9 percent, German stocks fell 1.7 percent, and British shares dropped 1.4 percent.

Compounding the lingering concerns over Asia were mounting jitters over Latin America, where several developing nations roiled world financial markets about three years ago with their own fiscal crises.

Regardless of the global economic picture, business conditions remain vigorous in the United States. New government reports released Thursday showed fewer claims for unemployment benefits and strong demand for new homes.

On Wednesday, Federal Reserve Chairman Alan Greenspan helped soothe investor jitters by saying the market’s slide could help prolong the nation’s 6-1/2 year economic expansion by returning stock valuations to more reasonable levels and slowing the economy to a more sustainable pace. His remarks, delivered in a scheduled report to Congress, bolstered hopes the Fed won’t raise its short-term interest rates to slow borrowing and spending as protection against inflation.

The U.S. outlook also improved with another strong day in the Treasury bond market, which has become a safe haven for investors who’ve pulled their money out of stocks. As bond prices rose Thursday, long-term borrowing costs eased back toward Monday’s 20-month low.

The dollar hasn’t fared as well amid all the turmoil, with foreign exchange traders seeking refuge in the currencies of Switzerland and Germany, which are seen as having less exposure to Asia’s financial problems. This week, the dollar has lost 5 percent of its value against the Swiss franc and 3 percent vs. the German mark.

Some of the stocks that moved substantially or traded heavily Thursday:

NYSE

Waste Management, down 5-3/4 to 23-1/4.

The Oak Brook, Ill.-based trash hauling company said late Wednesday that Chairman and Chief Executive Officer Ronald T. LeMay and Chief Financial Officer John D. Sanford had resigned, effective immediately.

Data General, down 4-3/8 to 19.

The Westboro, Mass.-based company reported third-quarter earnings that fell below Wall Street analysts’ estimates.

Sun Healthcare Group, up 5/8 to 19-5/8.

The Albuquerque, N.M.-based company reported third-quarter earnings that topped Wall Street analysts’ estimates.

Aames Financial, up 1-1/4 to 14-3/8.

The Los Angeles-based home equity lender reported first-quarter earnings that topped Wall Street analysts’ estimates.

NASDAQ

Phycor, down 5-9/16 to 24.

MedPartners, down 1-1/8 to 25-3/4 on the NYSE.

Birmingham, Ala.-based MedPartners, the largest company in the physician-management business, is being acquired by the No. 2 company, PhyCor of Nashville, Tenn., in a deal worth about $7 billion.

Apache Medical Systems, down 5/8 to 2-3/8.

The McLean, Va.-based company reported a third-quarter loss that fell below Wall Street analysts’ estimates.

Pegasystems, down 9-3/8 to 18-3/8.

The Cambridge, Mass.-based company said an “unanticipated issue” raised by its auditors has forced the company to reschedule the release of its third-quarter results, and may possibly lead the company to restate its second quarter results.

Quaker Fabric, down 3-3/4 to 19.

The Fall River, Mass.-based maker of woven upholstery fabrics for furniture reported third-quarter earnings that fell below Wall Street analysts’ estimates.