Nasdaq Stocks

Investors who trade stocks listed on the Nasdaq stock market could save millions of dollars a year under new rules that are designed to help small investors get the best prices possible for the shares they buy and sell.Already, the National Association of Securities Dealers Inc., the parent of the Nasdaq, is seeing narrower spreads among 50 stocks that began trading under the new rules Jan. 20.The 50 stocks, which include companies such as Microsoft Corp., Intel Corp. and Amgen Inc., have experienced on average a 33 percent reduction in the spread -- the difference between a dealer's buy and sell price that approximates his profit -- from 36 to 24 cents, in the first 10 days of trading, according to the Washington-based NASD.

Nasdaq, the world's largest electronic stock market, announced yesterday that it would buy Instinet, the last major operator of an electronic trading system still standing, for $1.9 billion. The deal, which Nasdaq's chief executive called the "worst-kept secret on Wall Street," comes two days after the New York Stock Exchange made its surprising announcement that it would buy Archipelago, another big electronic trading system. The two deals will ultimately determine who controls the trading of trillions of dollars of stocks every day. The transactions illustrate how much has changed recently: the Securities and Exchange Commission has rules governing markets, profits in the trading business have been pushed to virtually zero and the vast difference in how stocks are traded, either by humans or through completely automated systems, is becoming more stark.

If the market for big stocks is depressed, then the market for small stocks seems almost lifeless.Signs of distress in the over-the-counter market include trading volume, which has fallen to its lowest level in almost two years, and prices, which have fallen relentlessly to the lowest levels in several years for many stocks. Prices are falling much more rapidly than among larger stocks.While the big NASDAQ stocks -- like Apple Computer, MCI Communications and Intel -- trade generally in line with the large stocks on the New York Stock Exchange, the smaller stocks, the ones that are not household names, have suffered the greatest carnage.

NEW YORK -- The Nasdaq composite index tumbled again yesterday, bringing the fall from its record to 19.7 percent, as investors continued to flee technology stocks that are expensive relative to earnings, including Cisco Systems Inc. and JDS Uniphase Corp. The Dow Jones industrial average rallied as investors snapped up cheaper industrial and consumer shares, including Alcoa Inc. and Minnesota Mining and Manufacturing Co. International Paper Co. rose after it reported profit that beat expectations.

WASHINGTON -- God, a wit warns, is going to come down and pull civilization over for speeding. The stock market has done that to America's economy. Time was, the economy drove the stock market. Now causation can work the other way, at least when the market controls confidence. However, although surveys show plunging consumer confidence, consumer behavior is producing a negative savings rate -- spending outstripping after-tax income. Consumer spending is two-thirds of gross domestic product, and in this year's first quarter such spending probably was 3 percent higher than in last year's.

NEW YORK -- Stocks closed mostly higher yesterday as takeover speculation in the media industry sent investors scrambling for cable-TV stocks. Enthusiasm for the cable issues offset a decline in utility issues and concern about weaker corporate earnings and potentially higher interest rates.The Dow Jones industrial average gained 10.06 points, to 3,603.19. Entertainment, media, publishing and electrical-equipment stocks led the advance after Bell Atlantic Corp. announced that it would buy Tele-Communications Inc. and Liberty Media Corp.

NEW YORK -- The SEC released its long-awaited "Market 2000" report yesterday, a 450-page survey of the stock market that is less a blueprint for the future than a tune-up guide.The Securities and Exchange Commission's report, some of which is expected to result in new laws and regulations over the coming year, calls for few basic changes in how the major stock markets are run. Instead, it proposes a series of adjustments to make trading more open and fair.For most investors, the biggest change would be share prices quoted in increments as small as one-sixteenth of a dollar, or 6.25 cents.

NEW YORK -- U.S. stocks tumbled in the final hour of trading yesterday, buffeted by computer-guided sell orders and surging government bond yields.The decline erased big gains in over-the-counter stocks and sparked a retreat in blue-chip issues.The Dow Jones industrial average closed 36.20 points lower, at 3,268.96. The index fell as low as 3,260.86, after rising as high as 3,313 at midday. Standard & Poor's 500 index plunged 3.79, to 430.73.The high-flying NASDAQ Combined Composite slid 3.64, to 678.21.

THE FIRST time Robert J. Shiller saw his book-length prophecy of the stock market collapse on sale, he was in a Washington train station. It was March 21, 2000. Shiller, an economics professor at Yale, was appearing before a House subcommittee on monetary policy. The subject of his testimony was the same as that of his book: the go-go market. The Dow closed at 10,867 that day; the Standard & Poor's 500 at 1,501; the Nasdaq at 4,865. Had you wandered into the B. Dalton store in Washington's Union Station and picked up Shiller's book, Irrational Exuberance, you could have read this: "The present stock market displays the classic features of a speculative bubble: a situation in which temporarily high prices are sustained largely by investors' enthusiasm rather than by consistent estimation of real value."

After a day's respite, worries that the economic slowdown is broadening rocked Wall Street yesterday, sending stocks into a tailspin as the Dow Jones industrial average plunged 317.34 points to its first close below 10,000 since October. New profit warnings from big corporations and news of trouble with Japan's banks further alarmed skittish investors and drove the blue chip Dow to 9,973.46, down 3.08 percent. Damage to already battered technology stocks was less as the Nasdaq recovered from an early plunge to end with a loss of 42.69 points, at 1,972.