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
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.