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Sellers pound Wall Street
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August 11, 1998: 1:40 p.m. ET
Stocks hit by a heavy sell-off as yen woes wake up fears of Asian crisis
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NEW YORK (CNNfn) - A broad sell-off continued to pound U.S. stocks in afternoon trading Tuesday, caused by growing worries about the effects Asian crisis after the Japanese yen slid to an eight-year low against the dollar.
Losses were especially pronounced in the technology sector. Shortly before 1:30 p.m. the Nasdaq Composite was off 50.30 points, or about 2.8 percent, at 1,788.91.
The Dow Jones industrial average traded 199.80, or about 2.4 percent, lower at 8,375.05. The S&P 500 index fell 20.49, or about 2 percent, to 1,062.65. The Russell 2000 index of smaller companies was off 12.66, or 3.1 percent, to 398.98. Market breadth was extremely negative, with declines trouncing advances 2,701 to 383 on trading volume of 469 million shares on the New York Stock Exchange.
(Click here for a look at today's CNNfn market movers.)
Disappointment with the pace of economic reform in Japan and fear that Tokyo's inability to fix its banking system and generate economic growth would trigger currency devaluations throughout Southeast Asia sent world currency traders on a yen dumping spree overnight. That, in turn, caused heavy selling in stock markets in Asia and Europe.
"I think what's very disturbing about the present crisis is that there are a number of things going on at the same time, all of which aren't very good," said Desmond Lachman, head of global emerging markets at Salomon Smith Barney. "We've got the Japanese yen going to eight-year lows, we've got talk about devaluation in China, we've got Hong Kong coming under attack and we've got a number of other Asian economies just showing incredible signs of weakness." (265K WAV) or (265K AIFF)
U.S. bonds rallied, attracting heavy buying from investors seeking a safe haven amid the currency and equity markets' turmoil. The benchmark 30-year Treasury bond surged 1/2 of a point in price for a yield of 5.59 percent.
Running for the exits
The looming threat of a lasting Asian crisis, whose consequences likely will include a slowdown in U.S. growth and a drop in corporate profitability, sent investors in U.S. stocks running for cover. Wall Street's inability to recover from a blistering sell-off last week added to the bearish mood in the market.
Few market sectors escaped the tumble and those with heavy exposure to Southeast Asia were hit the worst. Among them, major technology stocks melted away, with Microsoft (MSFT) losing 1-3/8 to 103-1/16, Dell (DELL) tumbling 4-1/16 to 106-3/16 and Intel (INTC) shedding 2-1/16 to 84-9/16. Dow component IBM (IBM) shed 2-3/4 to 127-1/8.
Multinational banking and financial conglomerates also felt the sting of selling, with Dow member J.P. Morgan (JPM) losing 5-1/8 to 115-1/16. Fellow blue chip Travelers (TRV) shed 3-1/2 to 58-1/16 and American Express (AXP) was down 5-7/16 at 95-3/8. Citicorp (CCI) lost 9 to 143-1/2 and Chase Manhattan (CMB) fell 4 to 64-1/2.
Shares of retail brokerage PaineWebber (PWJ) managed to buck the trend, rising 3-1/8 to 48-1/8 on the heels of a German newspaper report that Germany's Dresdner Bank AG has started negotiations to buy the company. Neither company would comment on the story.
Despite a tumble in world oil prices to 10-year lows, oil shares were perhaps the only market sector shielded from investors' wrath, helped by news of a planned multibillion dollar merger between British Petroleum (BP) and Amoco (AN). The deal will create an oil powerhouse with market capitalization of $110 billion. American depositary receipts of BP rose 2-1/8 to 78-1/8, and shares of Amoco rallied 6-3/16, or more than 15 percent, to 47-3/16.
Other oil stocks mostly followed suit. Shares of Dow member Chevron (CHV) gained 2-7/16 to 78-1/8 and fellow Dow component Exxon (XON) was off only 1/2 at 69-15/16. 
-- by staff writer Malina Poshtova Zang
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