Dow takes big tumble, dropping 220 points Drop of 2.9% ends DJIA's worst week in more than 8 years

Wall Street

January 10, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks suffered their biggest drop since October yesterday amid concern that weak Asian economies will crimp demand for U.S. exports and hurt corporate earnings.

The Dow Jones industrial average slid 222.20, or 2.9 percent, to 7,580.42, its biggest slide since a 554-point, or 7.2 percent, tumble on Oct. 27. Not one of the 30 stocks in the average gained. The Dow lost 384.62 points, or 4.8 percent, this week, its worst week in eight years.

International Business Machines Corp. and other computer companies that do a lot of overseas business led the retreat.

As in October, the decline was spurred by losses in Asian stock markets. Benchmark indexes from Hong Kong to Singapore tumbled as currencies in the region fell, driving interest rates higher and crushing local businesses that need to pay dollar-denominated debt. The Philippine Stock Exchange composite index plunged 8.3 percent.

Maryland stocks fell yesterday, led by T. Rowe Price Associates, which dropped $4.875 to $54.875, and Legg Mason Inc., which fell $3 to $50.625.

Declining stocks outnumbered those that rose by 5 to 1 on the New York Stock Exchange. About 745 million shares changed hands in the fourth-busiest day ever on the Big Board.

The Standard & Poor's 500 index fell 28.35, or 3.0 percent, to 927.69, while the Nasdaq Composite index dropped 52.32, or 3.4 percent, to 1,503.22. As with the Dow, it was the S&P 500's worst week since Oct. 13, 1989, when a proposed buyout of airline UAL Corp. fell through and shook investor confidence. It was the Nasdaq's worst week in a month.

In other market indicators, the Russell 2,000 index of small capitalization stocks lost 12.76 to 412.95; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, fell 265.64 to 8,875.47; the American Stock Exchange composite index dropped 17.32 to 650.24; and the S&P midcap index lost 10.31 to 312.8.

Oil stocks fell amid concern that demand for energy will weaken as Asia's problems deepen. Chevron Corp. fell $2.375 to $71.125, Exxon Corp. slipped $1.4375 to $58.125, Texaco Inc. fell $1.75 to $50.375, and Mobil Corp. dropped $2.125 to $65.3125.

Computer shares fell a day after Dell Computer Corp. cut prices for corporate personal computers by as much as 15 percent. Dell lost $3 to $83.1875.

LTC The Morgan Stanley High Tech Index tumbled 22.32, or 5.0 percent, to 422.84, bringing its loss for the week to 7.5 percent. IBM fell $4.125 to $100.0625, Hewlett-Packard Co. fell $3.1875 to $62, Sun Microsystems Inc. fell $1.75 to $40.875, and Compaq Computer Corp. fell $2.375 to $56.9375.

Adaptec Inc. tumbled $14.375 to $21.5625 as about 30 million shares changed hands, making it the most-active stock in the U.S. The company warned that fiscal third-quarter earnings won't meet estimates because of weak North American sales of its computer adapter cards.

Owens Corning fell $1.625 to $32 after the maker of fiberglass, insulation and other building materials said 1997 earnings won't meet estimates, and said it will fire 2,200 people, or 9 percent of its work force.

Dimon Inc. fell $2.8125 to $22.1875 after the tobacco trading company said fiscal second-quarter earnings will be below expectations.

Emergent Group Inc. dropped $2.375 to $8.875 after the company said that fourth-quarter earnings will disappoint and that it agreed to sell two businesses for a total of $20.8 million. GameTech International Inc. dropped $4.6875 to $5 after the developer of electronic bingo game systems reported losses on a new product.

Stocks tumbled even as bonds rallied. The yield on the benchmark 30-year Treasury bond, which moves in the opposite direction to its price, fell as low as 5.69 percent, the lowest since the Treasury began sales of 30-year bonds in 1977.

Pub Date: 1/10/98

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