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Dow set for a dive
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January 13, 1999: 8:54 a.m. ET
Heavy losses overseas, Brazilian woes point to tough day on Wall Street
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NEW YORK (CNNfn) - The sell-off on Wall Street was set to continue at the open in New York Wednesday following sharp losses in overseas markets, more uncertainty about Brazil's economy and a steep drop in the S&P futures.
Wall Street saw the Internet and tech stock rally come to an end Tuesday and investors showed concern about the economic troubles of Brazil.
S&P futures were down 27.00 early Wednesday, pointing to a downturn in the Dow Jones industrial average of more than 200 points at the start of trading. A one-point drop on the S&P futures index typically translates into an eight-point swing in the Dow. The benchmark 30-year Treasury bond was up 48/32 for a yield of 5.110 percent.
The Dow Jones industrial average Tuesday plunged 145.21 points, or 1.51 percent, to 9,474.68. On the New York Stock Exchange, declines led advances 2,178 to 881 as 796 million shares changed hands. The Nasdaq Composite, taking by far the worst hit, tumbled 63.84, or 2.68 percent, to 2,320.75. The S&P 500 index dropped 24.37, or 1.93 percent, to 1,239.51.
(Click here for the latest S&P futures quote)
One of the concerns Investors have been tracking is the economic crisis in Brazil. The trouble increased as Gustavo Franco, president of the central bank, announced his resignation.
Jose Barrionuevo, director of global markets and strategy at Lehman Brothers, speaking on CNNfn's "Business Day", said "there is no question the market is very, very concerned."
"The political pressures are mounting," he said, "and the economic program in its present form will probably have to be changed."
Barrionuevo said the most serious concern facing Brazil is a change in its economic team.
"This is one of the best economic teams in emerging markets," he said. "It is the best team Brazil has had."
In company news, Intel Corp. (INTC), the world's largest semiconductor maker, reporter solid fourth-quarter profits Tuesday, but warned that it expects revenue for the first quarter of 1999 to be down from the fourth quarter figure of $7.6 billion. Intel stock climbed to 139 in after-hours trading after closing down 4-1/16 at 135-11/16 on the Nasdaq.
Appearing on "Business Day," Erika Klauer, semiconductor analyst with BT Alex. Brown, said investors probably would shrug off Intel's warning.
"Investors found in the last quarter that Intel was conservative in their guidance," Klauer said, "and they turned out to be way conservative. I think people will take the management guidance that sales would be flat in the coming quarter with a little grain of salt."
Yahoo! (YHOO), which reported Tuesday that its fourth-quarter revenue nearly tripled, was down 53 points in pre-opening trading Wednesday. The company had closed down 12-1/2 Tuesday at 402.
In addition, Witco Corp.(WIT), the global chemical manufacturer, announced the next phase of its strategic plan. The move includes divesting or seeking a strategic alliance for its Oleochemicals and Derivatives Group, which had about $413 million in sales in 1997 and represented 19 percent of the company's revenue. The company expects to complete the transaction this year. Witco was down 1/8 at 11/16.
In Asia Japan stocks rose Wednesday as stability in the dollar against the yen eased concerns about major exporters but Hong Kong and Singapore shares fell sharply on debt problems in China. The Hang Seng index plunged 4 percent, while the Straits Times Index slid 2 percent.
Shockwaves from Wall Street's sell-off hit Europe Wednesday, with bourses down sharply in early trade. Fears of economic difficulties in Brazil and growing concerns over banks' exposure to collapsed Chinese investment group GITIC prompted the wave of selling. 
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