ASIAN WOES SEND DOW INTO 207-POINT DIVE.Byline: Deborah Adamson Daily News Staff Writer Troubles in Asia led to renewed fears of weaker corporate earnings and roiled the U.S. stock markets again Monday, the latest chapter of a broad decline over the past month. The Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. started the trading day In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. down by as much as 134 points. It mustered a weak recovery at midday but didn't sustain it, plunging 100 points in the last hour to close at 8,627.93, down 207.01. The Dow is down 6.3 percent from its 52-week high of 9,211.84 on May 13. The Standard & Poor's 500 index closed at 1,077.01, down 21.83. The Nasdaq Composite The Nasdaq Composite is a stock market index of all of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the NASDAQ stock market, meaning that it has over 3,000 components. It is highly followed in the U.S. , which is laden with technology issues, closed at 1,715.75, down 29.30. Despite the recent sell-offs, many analysts say the U.S. financial markets haven't seen the worst yet thanks to the Asian financial crisis. In addition, economic problems in Russia could have wider repercussions repercussions npl → répercussions fpl repercussions npl → Auswirkungen pl , since many of its lenders are German. ``This is a very serious worldwide problem,'' said Don Wellenreiter, money manager at Defined Risk Asset Management Inc. in Newbury Park. While it's hard to say the bull market is over, a widening global crisis will rein in rein in Verb 1. to stop (a horse) by pulling on the reins 2. to restrict or stop: either prices or wage packets had to be reined in Verb 1. the markets for the next three to six months, he said. That's because problems in Asia and elsewhere in the world mean weaker exports for U.S. companies, hurting earnings. It also means that U.S. banks with loans in these areas face greater risks. Still, long-term investors took Monday's market drop in stride Adv. 1. in stride - without losing equilibrium; "she took all his criticism in stride" in good spirits . ``The market is too high anyway. We need this correction badly,'' said Nancy Sy, a Simi Valley Simi Valley (sē`mē, sĭm`ē), city (1990 pop. 100,217), Ventura co., SW Calif. in an oil, fruit, and farm region; laid out 1887, inc. 1969. resident. She wouldn't mind a more severe drop because she's ``looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. bargains.'' In fact, Coca-Cola, a stock she has been watching, has fallen close to her target price of $55. ``For me, this is good,'' she said. Rick Zulawski of Canoga Park also feels that a correction is sorely needed. The market is overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a and he said even a 1,000-point drop won't faze him. His strategy in a topsy-turvy market has been to be selective about his stocks. ``I'm very cautious,'' he said. ``I only pick good stocks.'' Jean Wagstaff, a Palmdale resident for whom the 207-point drop was a little ``nerve-racking,'' is sticking to her bullish outlook. ``I roll with the punches. I realize that there are good days and bad days,'' she said. ``I do think it will come back. I hope it will.'' This week is uniquely predisposed pre·dis·pose v. pre·dis·posed, pre·dis·pos·ing, pre·dis·pos·es v.tr. 1. a. To make (someone) inclined to something in advance: to roil the U.S. stock markets because of the ``triple witch,'' and coming announcements of corporate earnings that are expected to be lower because of Asia's influence. The triple witch occurs when options on stock index futures Index Futures A futures contract on a stock or financial index. For each index there may be a different multiple for determining the price of the futures contract. Notes: For example, the S&P 500 index is one of the most widely traded index futures contracts in the U.S. , bonds and individual stocks all expire at the same time. This week's triple witch is one of four each year. Wellenreiter expects second-quarter corporate earnings to be affected by the Asian crisis, leading to lowering of estimates by Wall Street analysts that in turn probably will lead to lower share prices. On Monday, 3M's stock declined by 5 13/16 to 81 on news that Asia's problems will hurt second-quarter and full-year earnings by 10 percent. As a result, the maker of industrial, commercial and health care products will miss analysts' estimates. ``We'll see more stories of companies not making projections,'' Wellenreiter said. However, despite Asia's problems, the U.S. stock and bond markets remain fundamentally strong, helped by low inflation and low interest rates, analysts say. ``There's an awful lot of good news in the U.S. market,'' said Michael Ellis, investment strategist at Newport Pacific Management in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , which manages $1.25 billion. ``The (yields of) 30-year bonds are as low as it has been . . . and Asia's problems put a cap on inflationary worries here.'' In an environment of low interest rates, existing bonds often gain in price because there's little threat of newer bonds coming out paying higher interest rates and attracting investor money. As prices go up, the bond yield drops. CAPTION(S): 4 Charts CHART: (1--2) INDEXES FALL The Dow Jones industrial average has lost 6.3 percent in a month; the S&P 500 has lost 3.7 percent. (3--4) TECHS SUFFER Two tech-heavy indexes have fallen in the last month: The Daily News/Bloomberg Index by 5.9 percent and the NASDAQ by 8.1 percent. |
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