S. Korea's misery infects market Dow takes loss of 127.54 before holiday

December 24, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday after the worst-ever plunge in South Korea's benchmark stock index heightened concern that Asia's economic slowdown will undermine U.S. profits. The Dow Jones industrial average suffered its worst loss in six weeks.

"Investors hate operating without a compass, but that's where we are," said Robert Stovall, president of Stovall/Twenty-First Advisers Inc., which oversees $1 billion. "No one knows how bad the damage is going to be in the U.S."

The Dow industrials dropped 127.54, or 1.6 percent, to 7691.77, led by J. P. Morgan & Co., which does much of its business overseas. The Standard & Poor's 500 index fell 14.58, or 1.5 percent, to 939.12, and the Nasdaq Composite index lost 22.15, or 1.45 percent, to 1509.91.

Small stocks, which have lagged their large brethren in the past two months, held up yesterday. The Russell 2,000 index of small- and mid-capitalization stocks fell just 0.85 to 422.03, a 0.2 percent drop.

Among other broad market indicators, the Wilshire 5,000 index, made up of stocks on the New York, American and Nasdaq exchanges, dropped 105.15 to 8,993.7; the American Stock Exchange composite index fell 2.54 to 660.53; and the S&P 400 midcap index lost 1.29 to 320.12.

DTC Maryland stocks fell, led by Lockheed Martin Corp., which dropped $1.625 to $92.75, and Snyder Communications Inc., which fell $1.4375 to $34.1875.

Most of the market's losses occurred in the last hour of the session, as investors took advantage of the last full day of trading before the Christmas holiday to raise cash by locking in gains or selling stocks that have declined.

Today, U.S. stock markets will close at 1 p.m. Eastern time, three hours early, to mark Christmas Eve.

Twenty-eight of the 30 Dow stocks declined yesterday. Among the two advancers, Travelers Group Inc. rose 43.75 cents to $52.4375, while International Paper Co. gained 6.25 cents to $42.5625.

Large banks with significant business in Asia declined the most. J. P. Morgan fell $4 to $111.875, and Citicorp dropped $4.1875 to $123.

Demand for U.S. exports is likely to weaken next year as economies slow worldwide, according to the International Monetary Fund. The IMF on Saturday estimated that 1998 U.S. gross domestic product would fall to 2.4 percent, down from an estimated 3.8 percent for 1997.

In Seoul, South Korea, the benchmark Kospi index of 775 companies plunged 7.5 percent as the won fell to a record low against the dollar, threatening to push companies unable to pay off foreign debt out of business.

"There's no consensus about where the world is going, or about which stocks are good and which ones are bad," said Robert Streed, a money manager at Northern Trust Co. in Chicago, which oversees $130 billion. "There's no consistent buying or selling."

Streed said he's buying shares of Ameritech Corp., a Chicago-based regional telephone company that's up 40 percent this year. It fell $2.9375 yesterday to $82.875.

Remedy Corp. plunged $11.3125 to $21.5625 on concern that its earnings will be hurt by International Business Machines Corp.'s acquisition of Software Artistry Inc., a Remedy rival. Shares of the maker of help-desk software more than tripled last year.

Friedman, Billings, Ramsey Group Inc. rose 50 cents to $20.50 in its first day of trading. The investment bank was formed in 1989 to manage stock sales in high-growth areas such as technology and financial services. Many regard the bank as a possible takeover target.

Ocean Energy Inc. rose $1.75 to $51.75 after it agreed to merge with United Meridian Corp., another oil and gas company. United Meridian fell $2.875 to $29.375.

Fifteen stocks fell for every 13 that rose on the New York Stock Exchange in trading of 515 million shares.

Pub Date: 12/24/97

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