A new scare in Japan combined with “triple witching” in U.S. derivative markets to drive stocks into a tizzy Friday.
The Dow Jones industrial average ended down 90.21 at 7756.29, or 1.15 percent, after plunging as much as 269 points earlier.
Turnover on the New York Stock Exchange was 787.4 million shares, the busiest day since a record of more than 1 billion shares changed hands Oct. 28.
Losing issues led gainers by 2-1 on the Big Board.
Analysts said the brisk turnover stemmed in part from the quarterly expiration of stock options, stock-index options and futures on the same day.
“`Triple witching’ had something to do with it, but the Dow would have been down 100 points anyway,” said Al Kugel, senior investment strategist at Stein Roe & Farnham Inc., a Chicago-based mutual fund and money-management firm. “The news from Asia has been very unsettling. We saw a 5 percent decline overnight in the Tokyo market and a sharp drop in Europe before it spread to us.”
“It shows there is a lot of fear and trembling out there,” said Robert Stovall, president of Stovall/21st Advisors in New York.
“It’s not just the troubles in Asia and Latin America. There’s a fear that earnings of American companies will be impacted by business overseas. And people also are wondering why the U.S. market is weak during a period when there usually is a seasonal rally just before Christmas.”
For the week, the Dow lost 82.01 points, or 1.05 percent.
The Standard & Poor’s 500-stock index fell 8.52 to 946.78 Friday, bringing its weekly loss to 6.61 points, or 0.69 percent.
The technology-heavy Nasdaq index closed 1.55 higher on Friday, at 1524.74. For the week, it was off 11.84, or 0.77 percent.
Bond prices headed in the opposite direction from stocks, driving yields to the lowest levels in more than four years. The yield on the benchmark 30-year Treasury bond fell to 5.92 percent, from 5.93 percent late Thursday.
“This was a continuation of the fallout from Asia,” said Patrick Arbor, chairman of the Chicago Board of Trade. “It’s a continuing flight to quality.”
The U.S. dollar rose for a second straight day against the yen after a leading Japanese food company failed. The news heightened speculation that a Japanese government plan to salvage that nation’s economy will fall short. The dollar was little changed against the German mark.
Some U.S. stocks bucked the general decline.
AT&T climbed $2.12, to $61.25, hitting a 52-week high for a second day in a row.
Coca-Cola gained $1.19, to $65.44; Micron Technology rose $3.31, to $27.31; IBM added $2, to $102; and Motorola climbed $2.31, to $58.12.
General Electric slipped 94 cents, to $73.06, even though GE boosted its dividend 15 percent and raised its stock buyback program to $17 billion, up $4 billion.
M-Wave Inc., a manufacturer of microwave printed circuit boards based in west suburban Bensenville, said it expects to post a pretax restructuring charge of between $3.9 million and $4.3 million in the fourth quarter ending Dec. 31. The firm also said it expects lower sales in the quarter because it had few new orders “of any significant volume.” Its stock rose 25 cents, to $4.
Despite the market’s unsettled showing, some analysts still felt there was a good chance for it to stage a rally in the remaining sessions of 1997.
