Market jittery over political tension in Russia Dow off 8 points

WALL STREET

March 23, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks fell yesterday amid concern about rising political tension in Russia.

The problems stem from speculation that President Boris N. Yeltsin might be impeached if Russia's constitutional court rules that his order establishing direct rule by presidential decree is unconstitutional.

"No one knows how this situation is going to play out, and it's creating a lot of nervousness among investors," said Jon Groveman, president of Ladenburg, Thalmann & Co.

U.S. stocks fell from the opening bell, following slides of 1.25 percentin Britain's FT-SE 100 Index and 2.2 percent in Germany's DAX Index.

The Dow Jones industrial average plunged more than 25 points, to a session low of 3,444.03, before rebounding to close 8.10 lower, at 3,463.48. The index recovered most of its losses in the final 45 minutes of trading, led by gains in Bethlehem Steel

Corp., Texaco Inc. and Caterpillar Inc.

The Nasdaq Combined Composite Index declined 6.10, or 0.9 percent, to 676.62, while Standard & Poor's 500 Index lost 1.30, to 448.88. The American Stock Exchange Market Value Index dropped 3.19, to 419.18.

Declining common stocks outnumbered advancers about 2-to-1 on the New York Stock Exchange. Trading was light compared with recent months as about 233 million shares changed hands on the Big Board.

The problems in Russia have large implications for the United States. The Clinton administration has said democracy in Russia is a key to America's national security and economy.

The prospect of rising tensions in Russia raises questions about how far President Clinton will be able to cut defense spending to pare the federal deficit. The administration also has said Mr. Yeltsin represents the best chance for political reform in Russia.

"If Yeltsin is deposed, Clinton would definitely have to rethink how much he cuts defense spending," said James Solloway, research director at Argus Research. "Yeltsin still represents Russia's best chance of modernizing and becoming more Western in its outlook."

"Real concern is developing that a civil war could erupt in Russia," said Barry Berman, head trader at Robert W. Baird & Co. "The market will remain on shaky footing until we see how this situation plays out."

Shares of long-distance telecommunication, food, tobacco and beverage companies were hardest hit yesterday.

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