NUMBERS RULE THE DAY; -299; DOW TAKES 3RD-BIGGEST POINT DROP IN HISTORY.Byline: Deborah Adamson Daily News Staff Writer After Tuesday's rout in the stock markets, Wall Street has started to use a ``b'' word it hasn't uttered in more than a decade: Bear. The stock market certainly has been quite volatile lately, but market analysts believe that Tuesday's rout was particularly a concern because two key indicators both fell near or below year-to-date lows at the same time: 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. and the Dow Jones transportation average The Dow Jones Transportation Average (also called the "Dow Jones Transports;" DJTA) is the oldest U.S. stock market index. Components Today, the index consists of the following 20 companies (weighted to adjust for stock splits and other factors): ``That puts in place the Dow theory Dow Theory A theory which says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high, it is accompanied or followed by a similar advance in the other. - when industrials and transportation make new lows or highs, it signals a (shift to) a bear or bull market,'' said Greg Smith Greg Smith may refer to:
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . ``The mood of investors is going to get a lot more cautious.'' On Tuesday, the Dow Jones industrial average dropped 299.43 points, the third-largest point drop in its history, to 8,487.31. However, the 3.4 percentage dip isn't even among the 20 worst percentage losses in stock market history. Still, the sell-off was widespread. Only one of the 30 stocks that comprise the Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance index rose: Procter & Gamble, which jumped $1.50 to $77.75. Adding Tuesday's sell-off, the Dow is now off 9.1 percent since its all-time high of 9337.97, set 12 trading days ago on July 17. Other indexes also have sustained substantial drops recently: The Standard & Poor's 500 is down 9.6 percent from its July 17 all-time high; 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. is off 11.35 percent from its July 20 all-time high; and the Daily News/Bloomberg Index, which tracks 50 of the largest locally headquartered companies, is down 13.65 percent from its high on April 22. The Nasdaq and the Daily News index both have had what Wall Street calls a ``correction,'' which is defined as a drop of 10 percent or more. A ``bear market,'' in Wall Street terms, occurs after a 20 percent decline. A few weeks ago, Prudential's Smith told his clients to pare back their exposure to stocks. He urged them to put half of assets in stocks and half in bonds. Previously, his advice was 65 percent stocks, 25 percent bonds and 10 percent real estate. ``My feeling was that the economic news was going to get weaker and analysts were still too optimistic on profits,'' Smith said. ``What we're now seeing is the market reflecting . . . more things to worry about on the profit front.'' Charles Allmon, editor and publisher of Growth Stock Outlook newsletter in Bethesda, Md., believes the market has indeed changed direction. ``The bear market has just begun,'' he said. ``I'm telling my subscribers that they should be looking at a dirty, four-letter word four-let·ter word n. Any of several short English words generally regarded as vulgar or obscene. four-letter word Noun called C-A-S-H.'' He cites 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 stocks, deteriorating corporate earnings and the Japanese recession and the Asian financial crisis continuing to affect U.S. companies. Allmon predicts that the Dow and the S&P will go down by 40 percent to 50 percent by 2000, give or take a year. As such, he has been telling readers to park 85 percent of assets in cash. The rest should be invested in gold. But Robert Mills, a senior vice president at Sutro & Co. in Woodland Hills, believes it's premature for some analysts to declare the bull market dead. ``They are wrong,'' he said. ``The market is letting out a little steam.'' The underpinnings of the market are still strong, Mills said, citing low interest rates and low inflation. While corporate earnings took a little hit, he said, they are still quite healthy and the bull market still has a way to go. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , investors who are nervous about the turbulent market should buy and hold quality companies. ``If you pick good quality companies and stick with them, they will bear out,'' he said. But on Tuesday, at least, Mills was one of the few people talking about deals on Wall Street. In fact, one widely followed analyst announced he no longer thinks the Dow will hit 10,000 by the end of the year. ``After being bullish for 3-1/2 years, I'm in the bear camp,'' Ralph Acampora, Prudential Securities Inc.'s market strategist Noun 1. market strategist - someone skilled in planning marketing campaigns strategian, strategist - an expert in strategy (especially in warfare) , told Bloomberg News. He said he now believes the Dow average could decline as much as 20 percent from its highs, which would take it down to 7,470. THE MARKET`S DOG DAY The stock market has tumbled after soaring to new highs in mid-July. A look at the three major market indexes and how they've fared since July 1: Dow Jones industrial average Down 9.11 percent from all-time high set July 17. July 1: 9,048.67 July 17: 9,337.97 Aug. 4: 8,487.31 S&P 500 Down 9.66 percent from all-time high set July 17. July 1: 1,148.56 July 17: 1,186.75 Aug. 4: 1,072.12 Nasdaq composite index Nasdaq Composite Index An index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the Nasdaq System (approximately 5,000 stocks) and is weighted according to the market value of each listed Down 11.35 percent from all-time high set July 20. July 1: 1,914.46 July 20: 2,014.25 Aug 4. 1,785.64 CAPTION(S): Photo, Chart PHOTO A clerk looks at the day's numbers while working on the floor of the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. , which took a beating Tuesday. Adam Nadel/Associated Press CHART: THE MARKET`S DOG DAY (see text) Associated Press |
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