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Wall St. pain intensifies
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August 27, 1998: 11:50 a.m. ET
Stocks plummet amid rising fears of looming Russian economic collapse
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NEW YORK (CNNfn) - A race to sell on Wall Street gathered speed at midday Thursday as investors fled the market amid rising fears that financial crises around the world would dent U.S. growth and corporate profits.
Once again, concerns that the world economy is in for trouble loomed large on market players' minds, and once again, the worst news came from Moscow.
The Russian ruble continued its slide, and for the second day in a row the country's central bank suspended all currency trading on the Moscow Interbank Currency Exchange. Later, the central bank extended the suspension through Friday.
"In practice, what you may see over time is a devaluation on the scale of something that you've seen in South East Asia," said Sonja Gibbs, strategist at Nomura International. "So you could see the ruble losing as much as, say, 75 percent of its value over time."
Meanwhile, calls for President Boris Yeltsin's resignation and rumors that he already had stepped down wreaked additional panic among market players.
Germany and other Western lenders were quick to warn Moscow they will not bail Russia out of its crisis with a quick cash injection, unless Moscow implements tough and sweeping economic reform. German Chancellor Helmut Kohl planned calls to U.S. President Clinton and British Prime Minister Tony Blair to discuss the Russian crisis. Kohl already has spoken to French President Jacques Chirac.
Shortly before 11:30 a.m. the Dow Jones industrial average lost 224.25 points, or 2.8 percent, to 8,299.10. Trading volume on the New York Stock Exchange was heavy and market breadth was sharply negative. Some 298 million shares changed hands with declines beating advances 2,621 to 291.
The Nasdaq Composite tumbled 65.25, or 3.7 percent, to 1,702.88 and the S&P 500 index shed 26.18, or 2.5 percent, to 1,058.01.
Selling was broad-based and all major market gauges felt the sting. The Russell 2000 index of small cap stocks lost 12.64, or 3.3 percent, to 367.78 and the Dow transports fell 89.60, or 2.5 percent, to 1,058.01. (Click here for a look at today's CNNfn market movers.)
The only market investors felt safe in was the market for U.S. Treasury securities. Bonds rallied as panicked investors from around the world sought the safety of debt instruments backed by the U.S. government. The benchmark 30-year Treasury bond rose 23/32 of a point in price, lowering the yield to 5.37 percent, a record intra-day low. News that U.S. economic growth in the second quarter slowed down, but still surpassed analysts' expectations, helped underpin the gains.
The dollar maintained its strength against the German mark, as investors sought safety. Germany, one of Russia's largest creditors, stands to suffer heavy damage in the event of a debt default by Moscow.
The dollar eased against the Japanese yen after overnight Tokyo's influential Vice Finance Minister for International Affairs Eisuke Sakakibara once again raised speculation that a yen-propping market intervention might not be far off.
Multinationals hit the hardest
Shares of multinational corporations and banks were hit the worst, as their profits stand to lose the most in a global economic slowdown.
Large financial companies, whose exposure to international currencies and holdings of overseas bonds make them very vulnerable in times of world market troubles, led Wall Street on the way down. Citicorp (CCI) fell 8-3/4 to 125-1/8 and Chase Manhattan (CMB) shed 4-1/8 to 60-1/8.
Republic New York (RNB), the parent company of Republic National Bank, fell 4-3/4 to 45-3/8 after issuing a profit warning and citing loses from Russian debt investments for its problems. Republic said each dollar it invested in short-term Russian Treasury bills was now worth 15 cents.
In the brokerage corner, shares of Lehman Brothers (LEH) plunged 5-11/16 to 52 and Merrill Lynch (MER) lost 7-1/16 to 77-9/16.
Among the biggest loser on the Dow, shares of J.P. Morgan (JPM) tumbled 5-13/16 to 112-1/8.
Shares of fellow Dow member Travelers Group (TRV) lost 3-5/8 to 51 and American Express (AXP) dropped 5-3/8 to 91-13/16.
And Coca Cola (KO) shed 3-13/16 to 75-3/8 after Merrill Lynch downgraded the company to "near-term neutral" from "accumulate." Merrill based its decision on bleaker profit prospects for the company because of the international market malaise. The brokerage kept its long-term "buy" rating on Coca Cola.
Large technology stocks, which also rely on sales overseas for a large part of their revenues, headed south with the rest of the market. Among the Dow components, IBM (IBM) shed 4-1/2 to 126-3/8, and Texas Instruments (TXN) fell 2-1/2 to 53-11/16.
Losses among Nasdaq heavyweights were also painful. Shares of Dell (DELL) fell 1-3/8 to 127-1/4, Intel (INTC) lost 3-3/4 to 79-1/4 and Microsoft (MSFT) dropped 1-23/32 to 110-27-32. 
-- by staff writer Malina Poshtova Zang
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