Closing Market Report

Star-Bulletin news services

Monday, May 24, 1999

Dow drops 174.61;
Nasdaq off 66.48

Associated Press

NEW YORK - Stocks fell sharply today as investors shed Internet and bank shares, fearing that profits will be hampered in coming months by threats as diverse as higher interest rates and the Year 2000 bug.

The Dow Jones industrial average dropped 174.61, or by 1.6 percent, to close at 10,654.67. At one point late in the session, the blue-chip average had tumbled almost 203 points.

The Standard & Poor's 500 fell 23.64, or 1.8 percent, to 1,306.65, and the Nasdaq composite fell 66.48, or 2.6 percent, to 2,453.66.

Decliners trounced advancers by a 2-to-1 margin on the New York Stock Exchange, with 2,036 down, 945 up and 535 unchanged. NYSE volume totaled 743.32 million shares vs. 691.66 million Friday.

The NYSE composite index fell 10.82 to 626.05, and the American Stock Exchange composite index sank 9.96 to 785.41. The Russell 2000 index of smaller companies fell 8.75 to 440.29.

The price of the Treasury's main 30-year bond was off 4/32 point, or $1.25 per $1,000 in face value, by late afternoon, while its yield rose to 5.76 percent from 5.75 late Friday.

After several listless sessions on Wall Street, investors seized upon some industry analysts' warnings as a catalyst for a selloff.

Bank stocks, which fluctuated last week amid the prospect of higher interest rates, were hit for a different reason today. Credit Suisse First Boston issued a "sell" recommendation for Citigroup, Chase Manhattan, J.P. Morgan and Bank One, citing concern about the Year 2000 computer bug.

Credit Suisse's banking analyst Michael Mayo said that while U.S. banks appear to be well prepared for potential glitches, many of their international counterparts may be prone to computer problems that could disrupt business and hurt earnings.

"Banks are the safest place to keep your money for the year 2000; it's the bank stocks that we're worried about," Mayo said.

Internet stocks led the Nasdaq's decline as investors shed some high-priced stocks in search of bargains among less well-known issues.

"People are finally getting bearish on the dot-com stocks," Hogan said. The trend was underscored as Prudential Securities' Ralph Acampora, a research director well known for his bullish market outlook, issued an in-house report that suggested many Web-related stocks are at the top of their price range.

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