NEW YORK (CNNfn) - Wall Street suffered a new round of heavy losses Thursday as troubles in stock markets around the world hit home and reminded already nervous investors that a global economic slowdown could get even worse.
The Dow Jones industrial average closed with a loss of 100.15 points, or 1.3 percent, at 7,682.22. Declines beat advances 2,094 to 999 as 881 million shares traded on the New York Stock Exchange.
The Nasdaq Composite fell 20.99, or 1.3 percent, to 1,571.86. The S&P 500 index lost 8.22 to 982.26. The Russell 2000 index of small cap stocks fell 6.36, or 1.8 percent, to 346.29. Severe weakness among airline stocks drove the Dow transports index down 78.08, or 2.9 percent, to 2,624.47.
The stock market's poor performance is likely to last for a while as earnings expectations for U.S. companies continue to drop, said Liz Ann Sonders, money manager at Avatar Associates. (289K WAV) or (289K AIFF)
Wall Street is likely to keep its eyes glued to the August employment report due out Friday, for the latest indication on how the U.S. economy is doing.
Stock markets in Asia, Europe and Latin America fell sharply amid a spate of investor-frightening news that traveled fast around the world.
In Tokyo, news that electronic giant Hitachi is facing severe losses and a ratings downgrade put salt on a market wound opened by the announcement that Toa Steel is about to go bankrupt. That would be the largest liquidation of a Japanese manufacturer since the end of World War II.
In Bogota, Colombia's central bank decided to widen the peso's exchange rate range by 10.6 percentage points, effectively devaluing the nation's currency. In reference to the turmoil rocking Latin American markets, U.S. Treasury Secretary Robert Rubin called the region's fate "profoundly important" for the United States. Reassuring investors later in the day, he said that the U.S. economy is still following a path of strong growth and low inflation.
And in Moscow, the battle for what is left of Russia's political soul continued as the Kremlin agreed to offer minor changes in a failed political pact with the lower house of parliament, the Duma. But the ever-adamant and Communist-dominated Duma, meanwhile, considered impeaching Yeltsin next week, even as it prepares to vote on the president's nomination for prime minister Friday. Acting Prime Minister Viktor Chernomyrdin, whose nomination the Duma already rejected once earlier this week, pledged "radical proposals" to end his country's financial crisis. As these events unfolded the ruble tumbled against the dollar.
Reflecting the uncertainty in the market, John Manley, chairman of Salomon Smith Barney's equity strategy committee, decided to cut his model portfolio's exposure to stocks to 55 percent from 60 percent, opting to keep 5 percent in cash. Manley kept his bond allocation at 40 percent.
The bond market rose, drawing strength from the weakness of stocks around the world and investors seeking shelter in one of the safest securities in the world -- debt backed by the U.S. government. The benchmark 30-year Treasury bond rose 20/32 of a point in price, lowering the yield to 5.29 percent.
The dollar tumbled against the world's major currencies as a new wave of turmoil hit global stock markets and the Russian crisis deepened.
Banks bite the dust
Large banking and financial services stocks, whose investments overseas have already bitten into their earnings, were again on the front line of the losers.
Shares of Citicorp (CCI) fell 10-1/4 to 98-1/2 and Chase Manhattan (CMB) lost 5-5/8 to 49-1/4. Among the Dow members, J.P. Morgan (JPM) tumbled 6-1/2 to 88-3/4 and Travelers (TRV) lost 3-3/8 to 41-1/8. All of these companies have already come forward to announce sizable losses from investments in Russia and other emerging markets. American Express (AXP) tumbled 6-1/2 to 77-1/4.
Brokerage stocks suffered a similar fate, with Merrill Lynch (MER) shedding 4-3/16 to 63-5/8, Lehman Brothers (LEH) dropping 3-3/4 to 38-3/8 and Morgan Stanley Dean Witter (MWD) tumbling 5-3/8 to 53-5/8.
Technology was the other market sector caught whirling in the eye of the storm. Revenues of high-tech giants also depend to a large extent on business in Asia and other parts of the world. A global slowdown has already hurt earnings in the first two quarters of this year.
Shares of Dell (DELL) closed down 2-3/16 at 108-1/16 and Microsoft (MSFT) finished off 1-5/16 at 99-1/4. Dow member IBM (IBM) bucked the trend and rose 1-1/4 to 121-3/4.
But shares of computer chip maker Intel (INTC), which failed to join Wednesday's tech recovery, once again aimed high and rose 1-7/8 to 76-3/4. Morgan Stanley raised its earnings estimates for Intel to $3.15 a share in 1998 and $3.90 a share in 1999. Separately, Piper Jaffray analyst Ashok Kumar repeated his "strong buy" rating on the company.
The gains in Intel shares came despite a profit warning by integrated circuit maker VLSI Technology (VLSI), which cited a slowdown in the semiconductor industry and said revenue in the third quarter will be 5 to 10 percent lower than in the second and well below market expectations. VLSI's shares fell 1, or more than 11 percent, to 7-13/16.
Finally, drug stocks were the one market sector shielded from the sellers. Shares of drug companies are usually viewed as a defensive investment in times of economic troubles. News that several drug companies are either reaching advanced trial stages or are close to getting Food and Drug Administration approval for their drugs, also helped boost drug shares.
Dow component Merck (MRK) rose 3-1/2 to 123-1/2, Eli Lilly (LLY) climbed 2-5/16 to 72-3/16 and Warner-Lambert (WLA) closed 2-1/4 higher at 70-3/16.
(Click here for a look at today's CNNfn's market movers) 
-- by staff writer Malina Poshtova Zang
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