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Thursday, Sep. 10, 1998
Dow gives up a third of Tuesday's gain
World troubles, Starr report cited as factors
By BRUCE MEYERSON
Associated PressNEW YORK -- Stocks fell sharply Wednesday, giving back more than a third of Tuesday's mammoth gains, as Merrill Lynch and Procter & Gamble provided new reminders of this nation's exposure to economic weakness abroad.
A day after posting a record 380-point gain, the Dow Jones industrial average fell 155.76 to 7,865.02, slipping back below this year's starting point of 7,908.25.
Broader stock indicators also gave back a big chunk of Tuesday's plunder, which boosted the Dow by 5 percent.
The Dow now sits about 450 points above the bottom of last week's selloff -- which included a 512-point slide two Mondays ago -- but remains nearly 1,500 points, or 15.8 percent, below the record of 9,337.97 set less than two months ago on July 17.
The post-Labor Day rebound from a steep summer slump came amid hopes the Federal Reserve will act soon to protect the U.S. economy from a fiscal crisis in Asia and Russia that shows signs of spreading to Latin America and Canada.
In a speech Friday, Fed chairman Alan Greenspan said the foreign drag on business may pose more of a risk than inflation, opening the possibility of an economy-boosting cut in the central bank's lending rates.
But with Merrill Lynch and Procter & Gamble both issuing disappointing business updates, investors were quickly reminded that a mounting global recession is already inflicting profit damage at American companies.
``To think that lower interest rates in the United States is going to solve fundamental problems in that part of the world is basically naive, and that's what the stock market is trying to say today,'' said Wayne Nordberg, a market analyst at Lord, Abbett & Co.
Shares of P&G slid 7 -- or the equivalent of 31 Dow points -- to 71, and Merrill Lynch plunged 6 to 59 in heavy trading.
The assessments from those companies were ``symptomatic of what the real trend is. We're going to see, as the year progresses, more disappointments on earnings,'' said Nordberg.
Compounding the uneasiness behind Wednesday's trading may have been the long-awaited delivery of Independent Counsel Kenneth Starr's report to Congress on possible impeachable offenses by President Clinton.
House Speaker Newt Gingrich said he expected the report would be kept from inspection until a resolution is passed on how the materials will be reviewed. He said he expected such a resolution to be introduced in the House Rules Committee on Thursday and brought to the full House on Friday.
In other trading Wednesday, the Standard & Poor's 500 fell 17.26 to 1,006.20 after gaining nearly 50 points during Tuesday's rally.
The technology-heavy Nasdaq composite index fell 36.31 to 1,624.55 after surging a record 94 points on Tuesday.
Declining issues outnumbered advancers by more than a 2-to-1 margin on the New York Stock Exchange, where composite totaled 833.39 million shares, down from Tuesday's hefty 967.23 million.
The NYSE composite index fell 8.02 to 500.57, and the American Stock Exchange composite index fell 11.29 to 613.44.
The Russell 2000 index of smaller companies fell 9.23 to 352.70.
Overseas, Tokyo's Nikkei stock average fell 1.1 percent, Frankfurt's DAX index fell 1.2 percent and London's FT-SE 100 fell 0.6 percent.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web