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Dow plummet deepens
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October 23, 1997: 2:26 p.m. ET
Stocks' tumble turns into meltdown as selling pushes Dow down 217 points
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NEW YORK (CNNfn) - An avalanche of selling continued to sweep U.S. stock markets Thursday afternoon as the Dow industrials plummeted over 200 points in heavy selling triggered by an overnight collapse in Asian markets.
At 1:48 p.m., the Dow Jones industrial average was down 217.58 points, or 2.71 percent, at 7,817.07 after briefly dipping to 7,805.29.
Meanwhile, Reuters news agency reported that the U.S. Federal Reserve and Treasury Dept. are "carefully monitoring" developments in Asia.
"The Federal Reserve and the Treasury are carefully monitoring the situation in Hong Kong and throughout Asia," White House spokesman Mike McCurry was quoted as saying. "They have been in close contact with their counterparts in the region."
Market analysts said Thursday's tumble could be just the precursor of more declines in the near term.
The index fell in sympathy with Hong Kong's Hang Seng, which shed 10.41 percent overnight in a record one-day point fall of 1,211.47 to a 19-month low of 10,426.30. The Tokyo market was down 3.0 percent at 17,151.5 and the Singapore stock market was down 4.7% at 1,649.87.
On the New York Stock Exchange, declines led advances, 2,502 to 429, as over 452 million shares changed hands.
In broader markets, the Nasdaq was down 41.96 or 2.26 percent at 1,666.12 while the S&P 500 index lost 23.54 or 2.43 percent to 944.95.
Analysts said international stocks and U.S. companies with multinational operations were likely to be hit the worst as large portions of their earnings come from overseas operations.
Giant soft drink maker Coca-Cola (KO) fell 2-1/4 to 51-1/16. The company announced that M. Douglas Ivester will replace Roberto Goizueta as chairman and chief executive, a move that had been expected. Goizueta died last Saturday from complications from lung cancer. Ivester was the company's president and chief operating officer. Coca Cola's stock was one of the most actively traded Thursday with almost 5 million shares changing hands.
"These events that we are seeing in Asia, the depreciations are inherently deflationary and many of the larger U.S. companies are the ones that do have exposure within their earnings mix to Asia," Rick White, managing director at Salomon Brothers, said. "Those earnings are going to be tough to grow probably over the course of the next 12 months."
Meanwhile, U.S. Treasurys continued to gain as investors sold stocks and sought refuge in bonds. The benchmark 30-year Treasury bond gave up some earlier gains but still traded up 1-2/32 to yield 6.33 percent.
Some analysts predicted that Thursday's sell-off is only the beginning of a larger market decline.
"We think this is the beginning of a further correction," said Richard Davidson, equity strategist at Morgan Stanley. "We think we are going to go below the lows [the markets] saw in early September, and so the decline from here before the end of the year will be at least another 10 percent."
Two Dow components were among the most actively traded stocks Thursday, with AT&T (T) down 15/16 at 48-1/2 and General Electric (GE) down 2-9/16 at 66-7/8.
Among net losers in the early sell-off on the New York exchange, Sony (SNE) was down 6-5/16 at 86-3/4, while Philips Electronics (PHG) slumped 5-17/32 at 80-3/8.
Dril-Quip (DRQ) continued to lead gainers, trading at 37-3/8 after pricing at 24 at its initial public offering Thursday. The Houston-based company manufactures off-shore drilling equipment.
Among other market movers, MCI (MCIC) shares fell 13/16 to 37-11/16 after the telecommunications giant reported a third-quarter loss of $182 million, or 26 cents a share, compared to a profit of $304 million, or 44 cents a share, in the third quarter last year. MCI's loss came from charges of $432 million the company took to restructure some of its businesses.
In other earnings news, Sara Lee (SLE) reported a 9 percent rise in profits to $225 million, or 46 cents a share, in its fiscal first quarter which ended September 27. Cosmetics giant Avon (AVP) reported a 10 percent jump in third-quarter earnings despite weak results in the U.S. The giant cosmetics manufacturer earned $68.6 million or 52 cents a share, up from year-ago earnings of $62.5 million, or 47 cents a share.
Technology stocks trading on the Nasdaq were battered heavily, with Microsoft (MSFT) down 1-1/8 at 134-9/16.
Intel (INTC) lost 1-13/16 at 82-1/8 following news that a court postponed the first hearing of its lawsuit against Digital Equipment (DEC) until Oct. 30. Digital is suing Intel for patent infringement.
Dell Computer (DELL) was also down 3-3/8 at 95-3/4.
The Dow Transports also sagged, losing 95.07 to 3,272.02. Among the leading losers in the index, American Airlines' parent AMR (AMR) fell 3-3/16 to 119-3/8, and UAL (UAL), parent of United Airlines, was down 5-5/16 at 94-1/4.
-- by staff writer Malina Posthova Zang
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