Closing Market Report

Star-Bulletin news services

Thursday, September 10, 1998

Dow sinks 249
on Clinton woes

Global turmoil also helps
fuel the drop as investors
flee to U.S. bonds

NEW YORK -- Stocks lurched lower today, with the Dow industrials down 345 points before recovering nearly 100 in the frenzied final minutes of trading.

The selloff extended yesterday's losses, more than wiping out all of Tuesday's record Dow gain, as fresh worries about impeachment added to Wall Street's uneasiness over a growing global economic crisis and its impact on U.S. corporate profits.

The Dow Jones industrial average, up a record 380.53 points Tuesday then down 155.76 yesterday, was down 345.52 during the final half hour of trading.

While it bounced back sharply in the closing minutes, it still ended the day down 249.48, a drop of 3.2 percent, at 7,615.54.

With its sixth-biggest point drop ever, the Dow now is 3.7 percent below where it began the year and 18.4 percent beneath the record 9,337.97 reached on July 17. Today's percent decline was not close to a record.

Broader indicators also were lower in heavy trading.

Elsewhere, stocks plummeted in Latin America and closed with big losses in Europe.

In the rush out of stocks, there was a surge in the market for U.S. Treasury bonds -- a traditional haven for cash in times of unrest. Yields on 30-year Treasury bonds, which move in the opposite direction of prices, fell to 5.18 percent. If that holds through the close later in the day, it would be the lowest since the government first began regular sales of those securities in 1977.

Among the uncertainties confronting traders is how Congress will respond to the long-awaited report delivered yesterday by Independent Counsel Kenneth Starr on possible impeachable offenses by President Clinton. Impeachment proceedings could bog down government and it is not known how that would affect the economy.

In addition, stocks have been hurt by disappointing profit announcements by companies, many of them related to the economic mess that has swept through Asia and Russia and is threatening Latin America.

In Sao Paulo, Brazil, trading temporarily stopped at Latin America's largest exchange after a 10 percent plunge in its main index after 67 minutes of trading. Shares tumbled even further when trading resumed amid worries about a devaluation of Brazil's currency and the selloff on Wall Street. The Bovespa stock index ended down 15.32 percent.

Mexico's Bolsa index, meanwhile, lost 9.82 percent.

Stocks also skidded lower in Europe, with the major index finishing down 5.8 percent in Germany, a major trading partner of beleaguered Russia. Russian President Boris Yeltsin assured German Chancellor Helmut Kohl by phone today that his new choice for prime minister would stick to market reforms if confirmed, the German government said .

Shares closed down 3.3 percent in London, Europe's largest market, and were off 4.6 percent in Paris.

On Wall Street, decliners led advancers by a 3-to-1 margin on the New York Stock Exchange, where volume totaled 875.73 million shares, up from 696.94 million shares yesterday.

The Standard & Poor's 500 was down 26.01, or 2.58 percent, at 980.19; the technology-heavy Nasdaq composite index dropped 39.22, or 2.41 percent, at 1,585.33. The NYSE composite index was down 12.80, or 2.56 percent, at 487.77; the American Stock Exchange composite index lost 7.21, or 1.18 percent, at 606.23; and the Russell 2000 index of small companies ended 7.72 points, or 2.19 percent, lower at 344.97.

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