With typical American independence, investors are pushing U.S. equity indices still lower even after international markets rebounded from their Hong Kong-led drubbing.
The domestic indices started the day in harmony with their overseas brethren, moving higher after Hong Kong's
index rose 6.9% and other major foreign indices rose 1% to 2%. But the U.S. gains deteriorated swiftly before 11 a.m. EDT, and around noon EDT the
Dow Jones Industrial Average
was down 121 to 7726.
led the losers.
Nasdaq Composite Index
was hit hard, down 28 to 1643 as
led a wide tech selloff. The broad
was down 13 to 937 and the small-cap
was down 2 to 447.
Heightening concern on Wall Street, the bond market reversed course and firmed toward midday, with the yield on the bellwether 30-year Treasury easing to 6.29%. "It's a little disturbing to see this decoupling," one stock salesman lamented.
"What's concerning everybody is, is the foreign market snapback sustainable?" he continued. "A lot of people think it's not." Also weighing on traders' minds is the prospect of a 12:55 p.m. EDT speech by
Fed Chairman Alan Greenspan
, as well as the chairman's coming Wednesday testimony before the
Joint Economic Committee
"People don't want to be long stocks right now," the salesman said. "I think they'll try
to rally, but I think they'll close lower. It's not over, but people are feeling pretty glum right now."
Gold and gold-company stocks, usually the beneficiaries of stock-market turmoil, are under pressure this midday as well. Gold was down 7.90 to 316.80, having edged up just 0.60 yesterday, and prominent gold companies including
Freeport-McMoRan Copper & Gold
were sharply off.
Catalyzing the downturn are reports that a panel of Swiss financial experts is advising Switzerland to sell 45 million ounces of gold -- about half its reserves -- over a 10-year period starting in 1999.
described the plan as an effort to "cut
Switzerland's large holdings of the unloved metal and at the same time improve the tattered image of the Swiss as cold-hearted profiteers from World War II."
"The gold market is really nervous already, and the news came out and hit the gold market pretty hard," a gold analyst at a New York securities house said. "Forty-five million ounces is a lot of ounces. There's some concern that other central banks will follow." Worldwide gold production totaled 75.4 million ounces in 1996, she said.
Despite the nervousness, the analyst said investors with a long time horizon don't have to rush to unload their gold holdings. "I think it's a very good trading opportunity," she said. "I don't see the gold price rising sharply over the near term, but there's a pretty good chance to make some money."