• ACI Russia

08/13/1998 17:00:50 U.S. stocks hurt at midday by Russian chaos

By Marjorie Olster

NEW YORK, Aug 13 (Reuters) - Chaos on Russian markets,

coming on top of Asia's financial crisis, heightened fears of

worldwide recession and bruised U.S. stocks at midday


"Synchronized global recession and deflation -- that's the

worry," said Hugh Johnson, chief investment officer at First

Albany Corp.

At 1215 EDT/1615 GMT, the Dow industrials were off 47

points at 8507 in volatile trade. An early rally took the blue

chips up 50 points, then quickly melted away into selling.

New York Stock Exchange program trading curbs were in

effect for the second time since 1149 EDT.

The tech-laden Nasdaq composite fell 17 points, almost 1.0

percent, to 1808. The S&P500 index lost five points to 1079 and

the Russell 2000 index of smaller stocks suffered the worst

damage of the major indices, down 1.44 percent to 402.66.

Declines overcame advances more than 2-1 on the Big Board.

Wall Street analysts said the latest Russian crisis had few

direct implications for the U.S. market. But coming at a time

of already high anxiety over Asia, it added to the jitters.

"There is speculation rising that Russia may be forced to

devalue," said Alan Skrainka, chief market strategist at Edward


"The more all these currencies fall, the greater the risk

that we could see a global recession. That is the biggest risk

to U.S. investors."

Russia's leading RTS1-Interfax <.IRTS> share index ended

down 6.49 percent, climbing back from a more than 11 percent

fall earlier in the session. The plunge came amid fears of a

rouble devaluation and a crisis in the interbank market.

The Russian central bank stepped in to defend the currency

after international financier George Soros urged a devaluation

coupled with swift western help to stabilize the rouble.

"The meltdown in Russian financial markets has reached the

terminal phase," Soros wrote in the Financial Times.

Moody's Investors Service cut the credit ratings of several

Russian banks and Standard & Poor's said it was reviewing the

government's debt rating.

The focus of U.S. investor worries was still firmly on Asia

though. "Russia is a problem, but it's nowhere near as big a

problem as Japan and Asia," said Johnson.

Among the most heavily traded stocks Thursday, shares of

Premier Parks <PKS.N> plunged 8-1/16 to 18-3/4 after warning

that 1998 earnings may fall short of estimates.

Kohls Corp. <KSS.N> rose 3-15/16 to 56-7/16 on news the

company will be added to the S&P 500 after the close of trading

Thursday. It will replace Mercantile Stores Co Inc. <MST.N>.

Finish Line Inc. <FINL.O> was the second most active stock

on the Nasdaq, down 3-7/8 to 9-7/8 after warning of

disappointing second quarter earnings and the possibility of

lagging profits for the whole fiscal year.

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