Newspaper article THE JOURNAL RECORD

Stocks, Dollar Fall in Trading Reminiscent of October Crash

Newspaper article THE JOURNAL RECORD

Stocks, Dollar Fall in Trading Reminiscent of October Crash

Article excerpt

NEW YORK - The dollar tumbled to record lows and stocks skidded violently Monday, yanking the Dow Jones industrial average down more than 76 points in what traders called a scary reminder of the epic crash six weeks ago.

Waning confidence in the U.S. commitment to cut its huge budget deficit, coupled with anxiety over inflation and fresh fear that intractable Third World debts could cripple the global economy, all contributed to a painful albeit much less destructive replay of Black Monday, Oct. 19.

``It doesn't look like anything's coming together in the stock market. It looks like everything's coming apart,'' said Robert Brusca, chief economist of Nikko Securities International Inc. in New York. ``It's just a gradual erosion of confidence that's occuring.''

The Dow average slid from the opening bell on Wall Street and ended the day with a 76.76-point loss to 1,833.72, the eighth worst point drop in the history of the bellwether index, though nowhere near the historic 508-point dive of Oct. 19. At midafternoon, the average had been down 110 points.

Broader market indices also dropped drastically. Stocks falling in price swamped rising issues by an 8-to-1 margin on the New York Stock Exchange, where trading volume totaled 268.91 million shares, the heaviest flow in a month.

The value of all U.S. stocks fell by $93.039 billion, according to the Wilshire Associates 5,000 Equities Index.

``This, on a smaller scale, is reminiscent of October 19th,'' said William Veronda, a portfolio manager for Financial Programs Inc., a Denver-based investment firm. ``We have financial crises breaking out all over.''

Like the situation that preceded the October crash, Veronda said, a number of events coalesced Monday to produce an anxiety attack, dominated by concern that Congress will reject a $76 billion deficit-reduction compromise reached last month despite exhaustive wrangling with President Reagan.

Hardening his stance on the deficit reduction, Reagan told business leaders Monday in Washington that he would insist Congress approve the entire package, saying ``a partially implemented deal is no deal.''

Other destabilizing elements in the market included an apparent lack of international coordination to defend the dollar's value, fear of higher interest rates and intensified concern that debt-ridden Third World countries will act more forcefully to limit or perhaps repudiate their repayment obligations. …

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