Dow sinks 299;
Nasdaq off 65
The blue-chip index
Star-Bulletin news services
is down more than 9%
from its record closeNEW YORK -- U.S. stocks suffered their worst decline since the Oct. 27 rout that shut down trading, amid concern that recovery in Asia won't come quickly enough to keep profit growth from weakening.
The Dow Jones industrial average fell 299.43, or 3.4 percent, to 8,487.31, its lowest close since March 5.
The Dow industrials are now down 9.1 percent from their July 17 record.
International Business Machines Corp. and J.P. Morgan & Co., which have both seen their earnings suffer from Asia's recession, led the decline.
"There are a lot of stocks for which people have made heroic assumptions on earnings" and they now realize "profits are not robust enough given price-to-earnings multiples," said Dirk van Dijk, an investment strategist with Dean Investment Associates, which manages $4.5 billion in Dayton, Ohio.
Decliners led advancers today by a 5-to-1 margin on the New York Stock Exchange, where volume totaled a hefty 826.76 million shares, up sharply from 617.62 million yesterday. It was second busiest day in NYSE history.
More than 1,230 stocks on U.S. exchanges fell to 52-week lows, compared with 56 that reached 52-week highs.
The Standard & Poor's 500 index sank 40.32, or 3.6 percent, to 1,072.12, led by a drop in bank shares such as Chase Manhattan Corp. and Citicorp.
The Nasdaq composite index dropped 65.46, or 3.5 percent, to 1,785.64, and is now down 11 percent from its July 20 high. The NYSE composite index was down 19.53 to end at 541.36.
The American Stock Exchange composite index lost 19.11, or 2.74 percent, to 678.76 and is down nearly 1 percent so far this year. The Russell 2000 index of small stocks fell 11.73, or 2.8 percent, to 401.63 and is 8.9 percent lower for 1998.
The severity of the sell-off prompted some on Wall Street to reconsider their market outlooks, with some prominent bulls predicting further losses were likely.
Ralph Acampora, Prudential Securities Inc.'s widely followed market strategist, today said the Dow average may decline as much as 20 percent from its highs.
"After being bullish for three and a half years, I'm in the bear camp," Acampora said in an interview.
He said he expects the stalled economies of Asia to continue to depress profits of U.S. companies. A 20 percent drop from the Dow's July 17 record would take it to 7,470.
Bank stocks dropped as investors bet that earnings growth for financial companies -- one of the best-performing groups in the bull market -- will slip.
"Across the board we're seeing a slowing of earnings momentum," said Satya Pradhuman, an investment strategist at Merrill Lynch & Co. "We've got to wait and see" if the economy bottoms out over the next few quarters, he said.
The price of the Treasury's main 30-year bond rose 15/32 point, or $4.69 per $1,000 in face value, by late afternoon, while its yield fell to 5.63 percent from 5.65 percent late yesterday. Prices and yields move in opposite directions.
Bloomberg News, the Associated Press and Reuters contributed to this report.
Asian markets fall
Reuters
despite yen policy shiftMost Asian markets sank today as traders worried about the volatile yen and shrugged off a new offensive by Tokyo suggesting a possible currency rescue.
After receiving a dismal welcome by the Japanese public and markets since its formation on Friday, the country's beleaguered new government went on the attack today, warning financial markets to beware of central bank currency intervention.
Finance Minister Kiichi Miyazawa said markets had misinterpreted remarks he made last week to mean market intervention was unnecessary.
"My statements may have been insufficient or sent the wrong message," Miyazawa said. "It was not my intention (on Friday) to say that interventions are unnecessary."
The last time the yen was this weak against the dollar was in mid-June, before the monetary authorities of Japan and the United States intervened to support the yen. But most markets remained skeptical over whether Japan's monetary authorities would back words with action and if the United States would be willing to join in again to help the yen.
The yen failed to take much heart from the intervention threats, despite bouncing from a seven-week low of 146.05 hit in early trading. It recovered two yen but then slipped toward the 145 level later in Tokyo trading. In late New York trading today, the dollar was at 144.97 yen.
Traders said moves on Tokyo's stock market mirrored the yen's roller-coaster ride. The Nikkei average ended down 141.50 points, or 0.88 percent, at 16,023.58.
Hong Kong shares ended up slightly after an early tumble, but shares in Indonesia, the Philippines and Thailand took heavy losses amid fears that the yen weakness could prompt another round of market turmoil.
In fact, Manila's main index closed at its lowest level in more than five years.
The 30-share Philippine Stock Exchange Index fell 31.63 points, or 2 percent, to 1,511.44 -- its lowest close since it hit 1,480.30 on April 2, 1993. The index dropped 64.54 points yesterday.