Stocks Dip; Dow Ends Off 39.26
Sep. 24, 1999
NEW YORK (AP) _ Stocks rounded out a dismal week with a volatile session but generally modest losses Friday. Investors continued selling semiconductor stocks, but made some cautious overtures toward battered shares of Internet and financial companies.
The Dow Jones industrial average fell 39.26 to close at 10,279.33. The Dow finished the week 524.30 points below last Friday's close, a loss of 4.9 percent. It was the first time the Dow has ever lost more than 500 points in a single week.
The Dow has now dropped 1,046.71, or 9.2 percent, below its record close of 11,326.04, set Aug. 25. But it is still up nearly 12 percent for all of 1999.
Broader stock indicators also ended lower. The Standard & Poor's 500 fell 3.05 to 1,277.36, and the Nasdaq composite index fell 9.42 to 2,740.41.
With little news to move the market, investors fell prey to the momentum that dragged the Dow below 10,500 on Thursday. Analysts consider 10,500 a ``technical support'' level, and most have long forecast that a drop below that level would prompt further selling as investors fear the market is approaching a major, enduring decline.
``It will take days, or maybe weeks, before the market stabilizes,'' said Tom Galvin, chief equity strategist at Donaldson, Lufkin & Jenrette Securities.
Friday, investors remained focused on fears that technology stocks, the market's strongest performers for most of 1999, are faltering.
The market continued to suffer from Microsoft president Steve Ballmer's remarks Thursday that technology stocks _ including Microsoft _ are too highly priced.
``The market was looking for a reason to sell off and he gave it a reason,'' said Brian G. Belski, chief investment strategist at George K. Baum & Co., in Kansas City, Mo. ``The market needs catalysts in terms of corrections and this was the catalyst.''
Technology stocks also came under selling pressure amid concerns that the earthquake that hit Taiwan earlier this week will hurt production of computer chips and may force price increases. Taiwan is a major semiconductor producer.
Microsoft slipped 1/4 to 90 15/16, and Intel fell 1 53/64 to 75 43/64.
Cyclical companies, whose fortunes tend to mirror the strength of the overall economy, sustained some heavy losses. Minnesota Mining & Manufacturing dropped 3 7/16 to 91 13/16, the worst performer in the Dow.
By early afternoon, some buyers were treading cautiously back into the market. America Online rose 10 to 97 1/2, a gain analysts attributed to Microsoft's decision to raise Internet access fees. That could prevent AOL from succumbing to price competition.
Financial companies had some strength, with American Express rising 1 to 136 3/8 and Bank of America gaining 3 1/16 to 57 3/4.
Friday's losses came despite some positive economic news. The dollar rose slightly against the Japanese yen for the second straight day, edging up to 104.15 yen from 103.95 late Thursday.
The U.S. currency has been lingering near its lowest levels against the yen since 1996, and its weakness has been a big factor in the stock market's selloff this week. A lower dollar makes imports more expensive and it also makes foreign investments more attractive.
In addition, the National Association of Realtors reported sales of existing homes fell by a bigger-than-expected 2.8 percent in August, the second straight decline after hitting a record high in June. The realtor group cited rising interest rates as the reason for the drop.
Interest rates remain a powerful force in the market as the Federal Reserve's Oct. 5 meeting draws near. Many analysts expect the Fed to raise rates for the third time this year.
Whether the central bank raises rates or holds them steady, the decision could lead to a market recovery, Galvin said.
``The market will grind along the bottom until then,'' he said.
Declining issues outnumbered advancers by a 3-to-2 margin on the New York Stock Exchange. Composite volume totaled 1.04 billion shares, compared with 1.06 billion the previous session.
The Russell 2000 index of smaller companies fell 3.12 to 417.09.
Overseas indexes plunged, following Thursday's weak showing on Wall Street. Japan's Nikkei stock average fell 2.62 percent. In Europe, Germany's DAX index lost 2.1 percent, Britain's FT-SE 100 fell 0.5 percent, and France's CAC-40 fell 1.3 percent.