Markets & Stocks
Dow plunges 512 points
August 31, 1998: 9:55 p.m. ET

Historic losses wipe out market's gains for 1998 as global turmoil mounts
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NEW YORK (CNNfn) - Frantic selling pounded Wall Street Monday, sending the Dow industrials 512 points lower and the Nasdaq Composite into its worst one-day point loss in history as a global economic rout showed no signs of abating.
     The spectacular sell-off wiped out all of Wall Street's gains for the year and left market experts wondering if the unprecedented bull market of the 90's has finally met its end.
     Investors, still hurting from last week's historic sell-off, found themselves caught in more selling as the political and economic future of Russia remained uncertain and data showed the U.S. economy is slowing down.
     The Dow Jones industrial average plunged 512.61 points, or 6.4 percent, to 7,539.07, the second largest one-day point loss in the index's history and its lowest close since Nov. 13, 1997. The Dow is now down 4.5 percent on the year and 19.3 percent down from its all-time high of 9,337.97, set a little more than a month ago, on July 17.
     On the New York Stock Exchange, losers overwhelmingly led gainers 2,880 to 399 as 927 million shares changed hands. Stocks traded on the NYSE lost $589 billion in market capitalization Monday, or $2.3 trillion since the Dow peaked on July 17.
     Losses for the Nasdaq Composite were even steeper. The index tumbled 140.43 points, or 8.6 percent, to 1,499.25, its largest one-day point decline ever. Monday's plunge wiped out all of Nasdaq's gains for the year and also left it with a 4.5 percent loss since Jan. 1.
     The S&P 500 index fell 69.72, or 6.8 percent, to 957.53, also its largest one-day point decline ever. The S&P 500 is now also at a loss for the year.
     The Russell 2000 index of small cap stocks lost 20.59, or 5.7 percent, to 337.95, also a record one-day point decline.
Fasten your seatbelts

     Alan Skrainka, chief market strategist at Edward Jones, warned investors to fasten their seatbelts and expect more volatility. But he also saw a silver lining for those courageous enough to seek out bargains in the rubble.
     "I do think it's fair to say that we're in a bear market and that's the time, if you're a long-term investor, that you want to step up and look for bargains," he said. (189K WAV) or (189K AIFF)
     Meanwhile in Moscow, the lower house of the Russian parliament, the Duma, voted to reject once-ousted then reappointed Prime Minister Viktor Chernomyrdin. Shortly after, Russian President Boris Yeltsin resubmitted Chernomyrdin's nomination. If Yeltsin's candidate fails to pass the Duma three times in a row, Yeltsin must dissolve the parliament and call legislative elections. He then can appoint whomever he wants to be prime minister.
     Russia's largest international creditors continued to urge reform but offered no money to help and planned no emergency meetings to deal with the crisis.
     An economic collapse in Russia is unlikely to hurt U.S. growth directly, but its after-effects could send shockwaves through the world's emerging markets. The financial meltdown in the former world superpower already has caused heavy trading losses among U.S. banks and investment companies.
Clinton briefed on market slide

     President Clinton was en route to Moscow for a meeting with Yeltsin when Treasury Secretary Robert Rubin called Clinton on Air Force Once with the news of the stock market plummet.
     Clinton authorized Rubin to issue a statement to reporters in which he said, "The fundamentals of the United States economy are strong due in part to the sound policies we've been following. The prospects for growth, low unemployment, low inflation continue to be strong."
     The bond market rallied as soon as the stock market resumed its slide. A busy schedule of economic data due to be released during the week also kept traders on edge. In the latest sign that the U.S. economy may be slowing, new home sales fell 1.6 percent in July, well below market expectations. The benchmark 30-year Treasury bond finished 24/32 of a point higher in price for a yield of 5.28 percent, a record low.
     The dollar fell against the German mark and the Japanese yen, hurt by the stock market's troubles.
How far is too far?

     In the stock market, selling was by far worst in the technology sector. After a small bounce at the open, shares of the high-tech heavyweights headed south again.
     Dell (DELL) tumbled 18-3/4, or 15.8 percent, to 100, in unusually heavy volume of 48.6 million shares. Intel (INTC) ended down 5-13/16 to 71-3/16, Microsoft (MSFT) lost 9-5/16 to 95-15/16 and Dow component IBM (IBM) shed 9-15/16 at 112-5/8.
     Financial and banking shares, which got pummeled in last week's sell-off, had no time to recover. Prominent members of the sector continued to reveal the size of trading losses they had suffered from their exposure to Russian markets. After a brief attempt to rally, financial stocks once again suffered heavy losses.
     Shares of Dow component J.P. Morgan (JPM) opened with gains of more than 5 points, but soon eased and finished 4-1/4 lower at 93-1/2. Late Friday the Wall Street powerhouse said its exposure to Russia was about $160 million and its trading revenue had suffered from losses in emerging markets.
     Other losers included Citicorp (CCI), off 8-13/16 to 108-5/16 and Chase Manhattan (CMB), down 4 at 52-1/2. Dow member American Express (AXP) fell 9-1/2, or almost 11 percent, to 78, while fellow blue chip Travelers (TRV) shed 3-11/16 at 44-5/8. Travelers' trading arm, Salomon Smith Barney, said it had accumulated an after-tax loss of $150 million in July and August, $60 million of which was related to Russian credit.
     Finally, the oil sector spent most of the day as one of the few corners of the market sheltered from investors' wrath, but was dragged down at the end amid the overall market meltdown.
     Bullish comments on the industry by Bear Stearns and an upgrade of three oil drilling companies failed to help the sector hold its ground. Shares of Atlantic Richfield (ARC) fell 9/16 to 58, Kerr-McGee (KMG) lost 1-9/16 to 38-1/2, and USX-Marathon (MRO) shed 1-9/16 to 26 after receiving "buy" ratings from Bear Stearns. Among the Dow 30, shares of Chevron (CHV) dropped 1-3/16 to 74-1/16 and Exxon (XON) lost 2-1/8 to 65-7/16.
     (Click here for a look at today's CNNfn market movers.) Back to top
     -- by staff writer Malina Poshtova Zang


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