Tuesday, April 28, 1998

Stocks slide, Dow tumbles below 9,000, as interest rates rise in bond market

By BRUCE MEYERSON AP Business Writer

NEW YORK (AP) - Stocks fell sharply today, extending last week's losses and sending the Dow industrials tumbling more than 200 points to sink below 9,000. The broad selloff came as markets in Asia and Europe stumbled and long-term interest rates shot back above 6 percent in the U.S. bond market.

The Dow Jones industrial average, which lost 102.88 points last week, was down nearly 220 in heavy trading at one point this afternoon, but recovered some ground and was off 186.59 at 8,878.03 in the last hour of trading. The average of 30 blue-chip stocks, which hit an all-time high of 9,184.94 on Tuesday, still is up about 12 percent this year.

The Dow's largest decline was the 554.26 points it shed on Oct. 27. Today's 2 percent drop in the Dow would not be close to the biggest decline ever, the 22.6 percent drop on Oct. 19, 1987, when the Dow fell 508.00.

Broader market indicators also fell sharply today.

With the quarterly flood of earnings reports winding down and fewer prospects for more record-setting gains, traders are getting jitters about the market's rapid rise.

Adding to the worries was a report today in The Wall Street Journal that Federal Reserve policy-makers agreed at a March 31 meeting that their next step is more likely to be to raise rates. Minutes of that meeting are not scheduled to be released until next month.

Earlier, policy-makers had been anticipating that the crisis in Asia's economies would cool off inflationary pressures in the United States without the need for the Fed to put on the brakes. So far, there has been little evidence of significant economic fallout.

But there also are worries in financial markets that conditions in Asia could worsen unless Japan snaps out of its long economic malaise. A government stimulus package announced Friday has been greeted with skepticism in financial markets.

Tokyo's Nikkei Stock Average plunged 2.26 percent today. Stocks also were lower in Europe.

On the U.S. bond market, yields on 30-year Treasuries leaped to 6.06 percent by midafternoon from 5.94 percent late Friday.