Closing Market Report

Star-Bulletin news services

Thursday, September 23, 1999

Stocks plunge as
worries mount

The Dow tumbles 205 points
while the Nasdaq sinks 108

Associated Press


NEW YORK -- Stocks plummeted today as investors sold heavily amid continued worries about higher interest rates and the strength of the dollar. A Microsoft Corp. executive's warning that technology stocks are overvalued robbed the market of a big source of strength.

The Dow Jones industrial average was down 205.48 to close at 10,318.59. That brought the Dow's decline over the past three sessions to 505.31 points.

Broader stock indicators also fell steeply. The Nasdaq composite index suffered one of its worst declines in history, falling 108.33, or 3.8 percent, to 2,749.83. The Standard & Poor's 500 fell 29.74 to 1,280.77.

Decliners beat advancers by a 5-to-2 margin on the New York Stock Exchange, with 2,144 down, 888 up and 498 unchanged. NYSE volume totaled 878.66 million shares vs. 808.80 million yesterday.

The NYSE composite fell 10.18 to 590.98; the American Stock Exchange composite index dropped 4.95 to 777.50; the Russell 2000 index of smaller companies fell 7.31 to 420.22.

The 30-year U.S. Treasury bond rose 1 5/32, or $11.56 per $1,000 security; its yield, which fell 8 basis points, hasn't been at 6.00 percent since Aug. 27.

"The market is under the weight of so many threats right now," said Scott Bleier, chief investment strategist at Prime Charter Ltd., citing rising interest rates, the tumbling dollar as the most pressing problems. "It has deteriorated."

Today's decline was broad-based, even as blue-chip stocks made some short-lived attempts to reverse their decline. In early afternoon, the Dow abandoned a brief rally that pushed it as much as 48 points above yesterday's close. The quick erosion of the buying spree reinforced concerns about the market's condition.

"There's no new fundamental reason for the weak market, but there's a great deal of nervousness," said William Meehan, chief market analyst for Cantor Fitzgerald.

Stock investors brushed aside news that could have supported stocks today. Bond yields fell. Also, the dollar inched higher against the yen in New York.

Still, the U.S. currency is lingering near its lowest levels against the yen since 1996. The dollar's weakness has contributed to a sharp decline in U.S. stocks this week. A weaker dollar makes imports more expensive, setting the stage for inflation. It also makes foreign investments more attractive.

Also today, a Labor Department report showed the number of Americans filing new claims for unemployment benefits fell unexpectedly last week to the lowest level in 25 years.

The extremely low U.S. jobless rate has fostered fears that companies will have to increase wages and benefits in order to attract skilled workers. That, too, could set the stage for a revival of inflation. Some economists believe any evidence of wage pressures will persuade the Federal Reserve to raise interest rates when its Open Market Committee meets Oct. 5.

After some early enthusiasm sparked by the merger of Internet service providers EarthLink and MindSpring, technology stocks fell steeply. The selloff gained steam after Microsoft's President Steve Ballmer said at a conference that technology stocks -- including his own -- are overvalued. (See story, page B-3.)

Semiconductor companies added to the weakness amid concerns that the earthquake that hit Taiwan earlier this week will hurt production and may force price increases. Intel and Texas Instruments fell.

Taiwan's semiconductor sector accounts for about 10 percent of the world's chipmaking capacity and about 80 percent of the "motherboards" used to run personal computers, according to the Semiconductor Industry Association.

Oil companies were among the strongest performers in the Dow. Those businesses are benefiting from OPEC's decision to stick to production cuts for another six months.

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