NEW YORK -- Stampeded by a military coup in the Soviet Union, investors dumped stocks on U.S. markets yesterday morning, sending the Dow Jones industrial average plunging more than 100 points before it rebounded to a comparatively mild 69.99-point loss at the end of the session.
The Dow's 2.4 percent decline, to 2,898.03 points, paled beside the 6 percent drop in the Tokyo market and the 9.5 percent drop in Germany as world financial markets tried to absorb the shock of Soviet President Mikhail S. Gorbachev's ouster.
The dramatic shifts in sentiment that marked U.S. stock trading yesterday also were evident in other domestic markets. Investors initially rushed to buy disaster hedges, including Treasury bonds, oil and gold, then reversed course and left all three with only modest gains or slight losses.
The day began just as a hurricane brushed lower Manhattan, battering the windows of skyscraper trading rooms and providing an apocalyptic cast that befitted the dire events overseas. Already, however, some of the markets had begun to steady. "By the time we came in this morning, the fun was over," said K. Duker, a foreign exchange trader at Midland Montagu.
In overnight trading, the dollar had rallied strongly against the German mark and more modestly against other currencies. During yesterday's session in New York, "trading was nervous ++ but not very active," Mr. Duker said.
It took several hours more for that calm to reach the floor of the New York Stock Exchange. By 10:30 a.m., only half of the 30 issues comprising the Dow Jones industrials had opened for trading because of an excess of sell orders. Shortly thereafter, estimates based on incomplete prices suggested that the Dow was off more than 100 points.
But by 11 a.m. the sentiment had begun to change.
Fidelity Investments, the huge Boston-based mutual fund company, said that its discount brokerage subsidiary had been deluged with sell orders before the markets opened, but in midmorning buy orders outnumbered sells. The Dow rallied, rebounding past 2,910 by 12:30 before sliding back slightly during the last half of the session.
"By noon it quieted down to what I would consider a very normal day," said Louis Henston, a specialist withFowler Rosenau Geary & Safir on the floor of the New York Stock Exchange.
The afternoon session was dull, with lackluster trading on all exchanges. The storm broke, leaving a beautiful summer day. Optimism appeared to take hold, with investment analysts telling clients that as bad as the Soviet coup appeared, the U.S. economy might be spared its worst effects.
"It's a disturbing development, but whatever happens has much more ominous implications for the Europeans than Americans," said Michael Metz, chief strategist at Oppenheimer & Co. "There won't be a horde of Russian immigrants arriving here. We, unlike the Europeans, don't depend on Russian natural gas, and trade between the U.S. and Russia is nominal. If you think about it, it just doesn't mean so much for the United States."
At T. Rowe Price, there was a trend out of international funds, and also away from the more aggressive domestic stock funds, Steven Norwitz, a spokesman, said. Overall, he said, less than $5 million came out of T. Rowe Price's $1.3 billion international stock fund.
Mr. Norwitz added that money flowed into more conservative equity funds, as well as into money-market funds and those specializing in precious metals.