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Russian tremors on Wall St.
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August 28, 1998: 1:53 p.m. ET
Stocks trim earlier losses as panic and uncertainty rule in jittery market
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NEW YORK (CNNfn) - U.S. stocks cut down their losses in afternoon trading Friday in a hectic session marked mostly by panic market swings as waves of jitters over the economic future of Russia kept pummeling investors.
Looming concerns that the former superpower's malaise likely will spread to other markets in the world suffocated an early rally in the U.S. stock market and led investors to the exits. Many on Wall Street are fearful of going into the weekend with large positions in the stock market, because of the unpredictability of what will happen next in Moscow.
The Kremlin struggled to regain composure and steadfastly denied rumors President Boris Yeltsin's days in office are numbered. True to his taste for sudden swift dismissals, Friday Yeltsin fired Anatoly Chubais, his chief negotiator with the International Monetary Fund and other international creditors. Then, in a taped interview with Russian television, Yeltsin said he would serve out his full term until the year 2000 and has no plans to dismiss the Russian parliament, the Duma.
Meanwhile, acting Prime Minister Viktor Chernomyrdin and the communist dominated Duma were said to have reached a consensus on a political strategy to rescue the country, although no details of the agreement were released.
Some of Russia's biggest creditors, Germany, Britain, France and Italy, offered Moscow moral support but no money as Russia struggles to pull itself out of a self-created financial abyss.
Shortly before 1:30 p.m. the Dow Jones industrial average was 50.72 points lower at 8,115.27. On the New York Stock Exchange, declines trounced advances 2,181 to 798 as trading volume reached 555 million shares.
The Nasdaq Composite fell 40.90, or 2.4 percent, to 1,645.51 and the S&P 500 index slid 9.61 to 1,032.98. The Russell 2000 index of small cap stocks shed 7.15, or 2 percent, to 358.95. (Click here for a look at today's CNNfn market movers.)
The bond market was lower, moving in the opposite direction of stocks. The benchmark 30-year Treasury bond was off 1/2 of a point in price for a yield of 5.37 percent. Some investors sold Treasury securities to cover losses in other financial markets.
The dollar fell against the Japanese yen after the Tokyo stock market slid to 12-year lows and stocks on Wall Street met sellers. The dollar also tumbled against the German mark after Russian markets recovered slightly overnight and European stocks followed suit, bouncing off their session lows.
A nervous breakdown?
In the stock market, banking issues, which suffered some of the heaviest losses in Thursday's blood bath, attracted buyers at the start of the session. But investors were still jittery about the sector, as exposure to international currencies and debt securities still is likely to hurt earnings over the near term. This nervousness showed as the trading session progressed, and financial stocks once again took a turn for the worse.
Citicorp (CCI) tumbled 2-7/8 to 119-1/8 and Chase Manhattan (CMB) fell 1-15/16 to 56-3/16. Among Dow components, J.P. Morgan (JOM) dropped 4-3/8 to 100-3/8, American Express (AXP) lost 5/16 to 90-11/16, and Travelers (TRV) was off 1-5/8 at 48-7/8.
Following the footsteps of a similar announcement Thursday by Republic New York (RNB), BankAmerica (BAC) said Friday it had accumulated trading losses of $220 million so far this quarter, mainly from Russia. The stock fell 1-5/8 to 72-1/8.
Brokerage stocks, also badly bruised in Thursday's selling disaster, continued their downward spiral. Morgan Stanley Dean Witter (MWD) dropped 4-1/4 to 65-5/16, Lehman Brothers (LEH) fell 2-1/16 to 48-3/8 and Merrill Lynch (MER) lost 2-5/8 to 75-11/16.
The technology sector also suffered. Earnings of technology heavyweights also depend to a degree on revenues from Asia and other overseas markets and have suffered in the past few quarters as a global economic slowdown has taken hold.
Shares of Dell (DELL) fell 5-5/16 to 119-3/4, Intel (INTC) was off 2-7/8 at 76-7/8, and Microsoft (MSFT) lost 3-3/16 to 106-1/16. Dow member IBM (IBM) was down 2-3/8 at 122-7/8.
Also in the tech sector, shares of Gateway (GTW) fell 2-5/8 to 52-3/4 after the made-to-order computer manufacturer said it is cutting prices for its Solo line notebook computers by up to 6 percent.
And the stock of Computer Learning Centers (CLCX) plunged 7-7/16, or more than 55 percent, to 5-15/16 after the company issued a profit warning, saying it expects earnings in its fiscal second quarter to come in well below Wall Street expectations.
Finally, telecommunications equipment maker Tellabs (TLAB) saw its stock shed 8-11/16, or more than 15 percent, to 49-1/8 after saying it still plans to buy rival CIENA (CIEN), although for a much smaller sum. Tellabs said it now will pay $4.7 billion for CIENA, more than a third less than the previous price Tellabs was willing to pay. The reason: a sharp drop in CIENA's shares over the past week, largely due to the loss of one of company's biggest potential customers, AT&T (T). CIENA's shares rallied 4-1/4, or more than 13 percent, to 35-1/16. 
-- by staff writer Malina Poshtova Zang
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