Stocks continue free fall

The Dow tumbles 210 points while
the Nasdaq sinks nearly 5 percent

Associated Press

NEW YORK -- Wall Street extended a global stock selloff today with the Dow industrials tumbling more than 200 points for a second straight day.

The Dow Jones industrial average, which plunged 237.90 points yesterday, fell an additional 210.09, or by 2.7 percent, to close at 7,632.53.

Broader market indicators also sank sharply, with bank and technology stocks particularly hard hit. Volume on the New York Stock Exchange was heavy, rising to 886.7 million shares from under 800 million yesterday.

The selling spree, amid worries about shrinking corporate profits and fears of new financial crises, left the Dow 18.3 percent, or more than 1,700 points, below the all-time high of 9,337.97 reached on July 17.

It was getting closer to the 1998 low of 7,400 that was reached during trading Sept. 1, before Wall Street's best-known indicator began a comeback bid that brought it above 8,100 as recently as Monday.

The Dow's 12.4 percent slide in the third quarter, which ended yesterday, was its worst quarterly performance in eight years. It now is 3.5 percent below where it began this year.

Stock prices earlier plunged in Asia, with Tokyo shares falling 1.6 percent to a new 12-year low, and shares were falling sharply in Europe, where Germany's central bank left interest rates unchanged.

Blue chips in London sank 3.1 percent to close at new lows for the year, while the key index in Frankfurt, Germany, closed down 5.5 percent and the main indicator in Paris was off 5 percent.

The sell-off in stocks has sent a flood of money into U.S. Treasury securities, a traditional haven in times of uncertainty. Yields on 30-year Treasury bonds fell further below 5 percent today, reaching levels unseen for long-term government bonds since 1967.

The price of the Treasury's main 30-year bond was up 15/8 point, or $16.50 per $1,000 in face value, by late afternoon, while its yield tumbled to 4.88 percent from 4.96 percent late yesterday.

Gold also benefited from the flight out of stocks, with futures contracts rising above $300 an ounce today to reach a three-month high on the New York Mercantile Exchange.

On Wall Street, all broad market indexes were considerably lower.

The Standard & Poor's 500 index dropped 30.62 to 986.39 and the technology-heavy Nasdaq index fell 4.81 percent, losing 81.51 to 1,612.33.

The New York Stock Exchange composite index was off 14.25 to 490.22, the American Stock Exchange composite index was down 12.50 to 608.50 and the Russell 2000 index of smaller companies lost 13.55 to 350.04.

Traders were alarmed to see prices on the NYSE nose dive 2.9 percent yesterday, even though the Federal Reserve had lowered a key interest rate one-quarter percentage point on Tuesday. Some traders were disappointed that the cut was not deeper amid fears a go-slow approach would not do enough to counter the economic crises that have swept through Asia and Russia and are threatening Latin America.

"The smaller-than-expected lowering of interest rates by the U.S. Federal Reserve has a chain reaction," said Lee Won-ho, an analyst at Samsung Securities Co. in Seoul, where the main stock index fell by 1.5 percent today. "It is affecting Wall Street, the Japanese market, ours and others."

There also are worries about where the next financial market crisis may erupt after last week's $3.6 billion private bailout of Long-Term Capital Management LP of Greenwich, Conn.

In addition, investors worldwide worry that the downturn on Wall Street could signal a possible slowdown in economic growth -- a bad omen for the many foreign companies dependent on exports to the huge U.S. market.

"There's a psychological impact overall, but there's also a direct impact on companies like Sony and TDK which derive a high percentage of their earnings from overseas markets," said Pelham Smithers, a stock strategist in Tokyo at ING Baring Securities (Japan) Ltd.

A new survey in Japan said confidence among small- and medium-sized businesses about the economy plunged to its worst level since the Bank of Japan began the quarterly samplings in 1967.

In addition, a group of U.S. factory executives, in the first broad reading from September, reported that the nation's manufacturing sector slowed for a the fourth straight month as global economic problems continued to hurt U.S. exporters. On a more positive note, however, the decline last month in the National Association of Purchasing Managers index was smaller than expected.