NEW YORK (CNNfn) - Wall Street pared some of its losses in early afternoon trading Monday, torn between fears about the economy and Asia and an opportunity to hunt for bargains.
Shortly before 1:30 p.m., the Dow Jones industrial average was down 31.41 at 8,905.95. Market breadth remained heavily negative, with losers ahead of gainers by 2,236 to 645 on a trading volume of 358 million shares.
The Nasdaq Composite dropped 38.14, or nearly 2 percent, to 1,892.85, and the broad S&P 500 index was off 6.48 at 1,134.32. (Click here for a look at today's CNNfn's market movers).
Worries about the economy seemed to dominate Wall Street, with some forecasters expecting a drop in the gross domestic product later this week. The Bureau of Economic Analysis is scheduled to release an advanced second quarter figure Friday, and some fear the GDP figure will be flat to negative for the first time in seven years.
Monday's losses come after the Dow suffered its worst weekly point loss ever, dropping 400.6, or 4.29 percent. The Dow dropped 195 last Thursday and didn't recoup any ground Friday.
"Last week was a bad week for the market, and this week does not look to be more propitious," said Alan Ackerman, senior vice president and market strategist at Fahnstock & Co.
Ackerman said selected blue chips and some Nasdaq members have fueled the bull market, but their movement has masked bearish tendencies by many more companies. "I think we've been in a type of correction since mid-June."
Fears about Asia also have thrown cold water on many analysts' outlooks. Morgan Stanley Dean Witter's top investment strategist, Barton Biggs, trimmed his equities position by 1 percentage point, to 12 percent, in his global model portfolio. He also lowered European equities by 1 point, to 13 percent.
The bond market pared earlier gains, failing to capitalize on the dollar's rise against the yen as investors question whether Keizo Obuchi, the presumptive next prime minister, will be able to enact swift fiscal reforms. The stock market's losses also failed to lure new investors to bonds. The benchmark 30-year Treasury bond was unchanged in price, for a yield of 5.68 percent.
The dollar rose against the yen to a five-week high on news that Obuchi may pick Kiichi Miyazawa as finance minister. Miyazawa has played a key role in drafting what many believe are ineffective fiscal policies. Investors seem to prefer Seiroku Kajiyama because they believe he would be better able to forge aggressive policies. The dollar was unchanged against the German mark.
Telecoms wired?
Wall Street had its eyes on telecom stocks as news of several billion-dollar deals caught investors' interest.
AT&T managed to swim against the tide on news of a $10 billion deal with British Telecommunications to provide international telephone services to businesses. Shares of AT&T (T) were unchanged at 59-15/16. But American depositary receipts of British Telecom (BTY) surged 6-15/16 to 144-11/16.
Investors seemed unimpressed by reports of a possible $55 billion merger between GTE and Bell Atlantic. Shares of GTE (GTE) were down 1-11/16 at 56-1/4, while Bell Atlantic (BEL) was down 3/16 at 45.
Bad earnings continued to drive prices down, with chemical maker Union Carbide (UK) off on news of a 38 percent slump in second-quarter profits. Shares were down 1-9/16 at 49-7/16.
Small stocks suffered even more than blue chips. The Russell 2000 index of small stocks suffered a big hit and was down 8.18, or nearly 2 percent, at 430.40.
And the tech sector, always sensitive to news about Asia, also felt heat. Software titan Microsoft (MSFT) was down 1-7/16 at 112-3/8, while Dell Computer Corp. (DELL) dropped 1-11/16 at 103-3/16.
Online giant America Online (AOL) was the third-largest loser on the New York Stock Exchange, down 5-3/16 at 114.
Internet bookseller Amazon.com (AMZN) was down 6-3/8 at 117-7/8. The search engines also were sputtering. Excite Inc. (XCIT) was off 3-1/2 at 41-1/8 while Lycos (LCOS) was down 4-13/16 at 62-7/16 and Yahoo! (YHOO) slipped 6-7/16 to 175-11/16.
One of the few winners of the day was General Motors (GM), which rose on hopes that it may be able to end a strike with the United Autoworkers. Shares were up 1-3/16 at 72-1/4. 
-- by staff writer Martine Costello
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