Dow cools off as
global markets falter

The blue-chip index falls 155.76 points
after yesterday's record run

NEW YORK -- Stocks faltered today, failing to follow through on yesterday's stunning rally, as Wall Street's attention returned to worries about global economic woes and their impact on corporate earnings.

The Dow Jones industrial average, up a record 380.53 points yesterday, fell 155.76, or 1.9 percent, to close at 7,865.02. Its rise yesterday to 8,020.78 was the Dow's first return above 8,000 since the 512-point pasting of Aug. 31. The drop left the Dow 43 points below where it began the year and 1,473 points, or 15.8 percent, beneath July 17's all-time high of 9,337.97.

Broader-market indicators also turned lower after record point gains yesterday and the best daily percentage increases in nearly 11 years.

Share prices also were lower in Britain, Germany, Japan and Hong Kong. London's FT-SE stock index 100 fell 0.6 percent; Germany's Dax (Xetra) index lost 2.7 percent; Tokyo's Nikkei stock average dropped 1.1 percent; and Hong Kong's Hang Seng index sank 3.47 percent.

Markets got a psychological lift as the trading week began from comments late Friday by Federal Reserve Chairman Alan Green-span indicating the central bank was prepared to lower interest rates if worsening global economic problems had a bigger impact on the U.S. economy.

Asian markets roared higher Monday. And yesterday, when Wall Street returned from the Labor Day holiday, major indexes not only had their best point gains ever but also their biggest percentage gains since Oct. 21, 1987, two days after the "Black Monday" crash.

The Dow had climbed almost 5 percent yesterday, while the Nasdaq composite index record rise of 94.34 points was a 6 percent gain.

Although Wall Street is trying to bounce back from a late-summer selling stampede, economic problems persist in Asia and Russia, which still threaten to spread greater pain elsewhere in the world.

As word of New York's rebound yesterday reached Asia this morning, people seemed happy but uncertain, given how much turbulence has wracked the world's markets lately.

In Tokyo, Masahiko Shimizu, 31, an insurance salesman who had just completed a stock transaction at Nomura Securities Co., said: "The Dow surge won't have a direct effect on the Japanese economy. It has its own problems, and they are mostly political."

When trading began today, Japan's 225-issue Nikkei stock index moved higher but closed off 157.95 at 14,755.54 because of new concerns about a major part of Asia's economic crisis -- the weakness of Japanese banks burdened with bad loans.

As Japan's political parties continue to wrangle over a proposed bailout for the banks, rumors surfaced on the market that Fuji Bank Ltd. was facing huge derivatives losses overseas. That triggered selling in the banking sector, traders said, even though the bank later called the rumors "totally groundless."

On Wall Street today, the Standard & Poor's 500 fell 17.26 to 1,006.20 after gaining nearly 50 points yesterday. The technology-heavy Nasdaq composite index fell 36.31 to 1,624.55 after surging a record 94 points yesterday.

Decliners led advancers by more than a 2-to-1 margin on the New York Stock Exchange, with 942 up, 2,175 down and 416 unchanged. NYSE volume totaled 696.94 million shares, down from yesterday's hefty 810.60 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 9.24 to 352.69.

The 30-year Treasury bond surged 1 19/32, or $15.94 per $1,000 bond, pushing its yield down 10 basis points to 5.26 percent, the biggest one-day gain since April 30. Two-year yields -- among the most sensitive to changes in expectations for Fed policy -- tumbled 16 basis points to 4.75 percent.