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Dow plummets 5 percent
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October 27, 1997: 3:11 p.m. ET
NYSE halts trading as Dow plummets, Nasdaq posts record point loss
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NEW YORK (CNNfn) - Panic swept U.S. stock markets Monday as the Dow plunged over 400 points and Nasdaq posted its biggest ever one-day point loss, causing halts in trading on all major U.S. stock exchanges.
What had started as a broad-based sell-off turned into a blood bath late Monday.
At about 2:41 p.m., the Dow Jones industrial average was 353.87 points, or 4.59 percent, lower at 7,361.54. Trading was halted at 2:35 p.m. as the index lost 350 points and a new rule, adopted after the 1987 market crash, was enacted for the first time. The market remained shut for 30 minutes.
Monday marked the second-largest, one-day point loss the blue-chip index has suffered, surpassed only by the 508.00 points the index lost on "Black Monday," October 19, 1987.
Broader markets suffered in sympathy, with the S&P 500 index down 43.35 at 898.29. The technology-laden Nasdaq dived 92.86 at 1,558.06, its largest-ever one-day point loss. That amounts to a 5.62 percent drop compared with the 11.35 percent the index lost on October 19, 1987.
Panic swept investors who dumped stocks after Hong Kong's benchmark Hang Seng index lost almost 6 percent overnight. International companies and those with overseas holdings were among the hardest hit amid fears that the Asian crisis would dampen their earnings.
On the New York Stock Exchange, declines led advances, 2,927 to 183, as over 606 million shares changed hands.
Monday's losses brought the Dow down 10.87 percent from its record high of 8,259 reached just months ago on August 6. Even with these steep declines, the Dow is still up 14 percent on the year, well above its 6,448.27 level at which it ended 1996.
The Nasdaq is up 20.69% on the year.
The U.S. bond market, however, posted gains as stock investors sought refuge in Treasurys. The benchmark 30-year Treasury bond gave up some of its earlier gains but still traded 7/32 higher to yield 6.25 percent.
In the stock markets, everything from technology to transportation took a hit.
Oxford Health (OXHP) led the list of net losers on the Nasdaq, its shares tanking after a disappointing earnings forecast. The company said it expects to report a third-quarter loss of anywhere between 83 and 88 cents a share, down from a profit of 33 cents a share in the third quarter last year. The stock, which was also the most actively traded on the Nasdaq, was down 40-1/8 at 28-5/8. More than 40 million of the company's shares changed hands.
"I understand why Wall Street is responding as violent as they are because this was the darling of Wall Street within the HMO group," said Gary Frazier, a healthcare analyst at Bear Stearns.
Computer stocks were also the focus of many investors Monday amid news from several major companies.
Among them, chip maker Intel (INTC), announced plans Monday to cut prices on its Pentium processors by an average of 20 percent. The company's stock traded down 4 at 76.
Also on Monday, Intel and Digital Equipment (DEC) said they had reached a broad agreement and would request a halt on all lawsuits. The two companies had been involved in a legal dispute over alleged patent infringement. The stock of Digital Equipment traded down 7-9/16 at 86-3/8.
Compaq (CPQ) led the list of most actively traded stocks on the NYSE after topping the list of third-quarter worldwide computer sales. The company shipped about 2.77 million units in the quarter for a total market share of 13.1 percent. But the stock succumbed to the overall sell-off, trading 6 lower at 62-3/4. IBM (IBM) was a distant second with 1.66 million units shipped in the third quarter.
Also, shares of Dell Computer (DELL) nosedived following an negative article in Barron's this weekend. The stock was down 7-9/16 to 86-3/8.
Meanwhile, Silicon Graphics (SGI) is expected to announce earnings and a restructuring plan Monday after the market closes. The stock traded down 2 at 15-3/8.
--by staff writer Malina Poshtova Zang
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