Stocks Prices Renew Slide; Dow Falls 41
NEW YORK (AP) _ The stock market slid more than 40 points today, erasing Monday’s partial rebound from an unexpected plunge and triggering curbs on computerized trading.
The Dow Jones industrial average finished another hectic trading day down 41.15 points at 2,931.57. Trading was a heavy, increasing as the day wore on.
Market professionals said the drop indicated that the reality of a weak economy had set in. They said Monday’s 30-point gain in the Dow now appeared to be due to technical factors and not any broad-based confidence in the market.
The malaise spread throughout stocks today, from big-company shares in the Dow to smaller over-the-counter issues. On the NYSE, the number of stocks falling outnumbered ones rising by more than 4 to 1.
″The bottom line is that the economy is not in such good shape,″ said Jeffrey Kaminsky, director of sales trading with Mabon, Nugent & Co.
After falling as much as 75 points by mid-afternoon, the Dow rallied in the final 90 minutes of trading.
Computer-driven program trading on the NYSE was restricted when the Dow average, the main market barometer, fell 50 points. The rule, designed to prevent declines from accelerating, was one of several implemented after the 1987 stock market crash.
″This is a follow through from last Friday,″ said Edgar Kam, a stock market analyst for Ernst & Co. ″Yesterday was a reflex rally, so to say.″
Some pessimism returned to the market after President Bush told reporters on Monday he was sticking by his decision not to offer an economic revival plan until January.
Contributing to the selling mood was a government report that the trade deficit widened to $6.53 billion in September, suggesting that the United States isn’t exporting its way back to economic health.
Stocks also were down in other world markets. In Tokyo, the Nikkei Average of 225 stocks closed moderately lower today, falling 73.26 points to close at 23,326.86. In London, the Financial Times-Stock Exchange 100-stock index fell 39.8 points, or 1.6 percent, to 2,463.1.
The Dow average, a widely watched average of 30 big-company stocks, had steadied itself Monday with a gain of 29.52 points after its sudden 120-point drop on Friday.
That drop, the fifth biggest point decline in history, had raised fears of another Black Monday, the name given to the 1987 crash.
Market professionals said that despite Monday’s gain there were still no signs that the economy was emerging from the recession, and the stock prices of many companies remained unusually high relative to corporate earnings.
″I don’t see the market being up as saying the decline is over,″ said Christopher Pedersen, director of trading at Twenty-First Securities Corp. ″I see Friday as starting a gradual erosion in prices.″
Washington’s retreat from a proposal to cap credit-card interest rates helped the market mount its comeback Monday.
Reports of imminent congressional action on credit cards were seen as the main reason for Friday’s slide. Investors feared it would lead banks to restrict credit, further weakening the economy.
The Oct. 19 crash in 1987 also was preceded by a major drop on a Friday. Since then, however, regulators and stock exchanges have imposed rules designed to keep stocks from falling too far, too fast.
Two years ago, the Dow dropped 190 points on Friday, Oct. 13, before regaining 88 points the following Monday. Several large drops earlier this year were followed by orderly trading, including one episode after the Soviet coup in August.