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Tuesday, Sep. 22, 1998
Relief over Clinton video sends Dow upward
Rumors about video were worse than reality, trader says
By PATRICIA LAMIELL
Associated PressNEW YORK - Stocks rebounded from sharp losses Monday as traders were relieved there were no new damaging disclosures when Congress released the president's videotaped grand jury testimony on his relationship with Monica Lewinsky.
The Dow Jones industrials, down 184.61 in a global selloff in the morning, recovered by the close. The rise of 37.59 to 7,933.25 left the Dow back above where it began the year, at 7,908.25. But the average of 30 blue-chip stocks still was 15 percent below the record 9,337.97 set July 17.
Broad-market indicators finished mostly higher and well above the day's lows. But more issues declined than advanced on the New York Stock Exchange.
The Dow dropped sharply at the opening bell just as Congress released videotapes and thousands of pages of evidence gathered for a grand jury investigation of Clinton's relationship with Lewinsky. By afternoon, with no new shocks apparent, buying accelerated and major indexes shook off big losses.
``The rumors rolling around Wall Street were far worse than anything in the report,'' said Bill Meehan, chief strategist at Cantor Fitzgerald.
Recent global economic turmoil highlights a need to reform the International Monetary Fund and the World Bank, British Prime Minister Tony Blair said in New York on Monday.
``The current crisis illustrates the weaknesses of the existing international financial system,'' Blair said in a speech to about 20 business leaders at the New York Stock Exchange. ``It needs to be modernized to meet the challenges of a new century.''
The prime minister said it was a good time to overhaul the entire global economic system - making finance more open to lessen lending risks.
The IMF lent $25 billion over the last year as the Asian economic crisis unfolded - and it now urgently needs more money, he said.
The IMF and its sister agency, the World Bank, were created in 1944 at a conference in Bretton Woods, N.H., to help create a new economic order in the aftermath of World War II. Critics contend the institutions have failed to keep pace with the dramatic changes in global economics.
The Standard & Poor's 500 composite rose 3.75 to 1,023.84 Monday, and the technology-heavy Nasdaq composite index rose 16.43 to 1,680.20, but the NYSE composite index declined 0.11 to 507.43.
The Russell 2000 index of smaller companies declined 0.68 to 362.58. But the American Stock Exchange composite index rose 1.17 to 628.33.
Declining issues outnumbered advancers by a 4-to-3 margin on the NYSE, where volume dropped to 610.89 million shares from Friday's heavy pace. Many traders were observing the Jewish New Year holiday.
Despite the sharp recovery by the Dow, the stock market has some serious problems in dealing with the financial crises in Asia and Russia, which already are hurting profits of major companies.
Especially upsetting Monday was the apparent unraveling in Tokyo of a set of bank reform measures that investors view as critical to a recovery from a deepening recession.
Tokyo's Nikkei stock average fell 2.8 percent to a new 12-year low. The FT-SE 100 index in London fell 1.3 percent, and the DAX index in Frankfurt declined 3.6 percent.
``It's clear that Japanese policy-makers recognize that there's a financial crisis, but there's nobody ready to take the steps to stop the financial crisis,'' said Hugh Johnson, chief market strategist at First Albany Corp. ``Rome is burning, and the Japanese Parliament are fiddling, and that's very very troubling to me and obviously to markets around the world.''
Investors are vitally concerned about the effect of Asia's crisis on the earnings of U.S.-based multinational companies, said Ned Riley, chief investment officer at Bank of Boston. He said he believes forecasts for earnings in the fourth quarter of this year and the first quarter of 1999 are overly optimistic.
``Our own forecast is for a flat to declining corporate profit trend,'' Riley said.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