----- Original Message ----- From: Mark Jones <[EMAIL PROTECTED]> To: crl <[EMAIL PROTECTED]> Sent: Saturday, March 17, 2001 9:25 AM Subject: [CrashList] Fear stalks the markets Wall Street in the grip of 'triple witching' effect as London sees its fifth-biggest drop Jane Martinson in New York, and Larry Elliott Saturday March 17, 2001 The Guardian Stock markets on both sides of the Atlantic ended a miserable week last night with further declines as disappointing earnings figures and downbeat economic data from the US increased fears of recession. London's FTSE 100 index suffered its fifth biggest points fall on record, dropping 166.4 points to 5562.8, a decline of more than 350 points on the week. In New York, where the markets are hoping for a hefty cut in interest rates from the Federal Reserve next week, the Dow Jones Industrial Average of blue chip stocks lost 152 points, or 1.5%, to fall below 10,000 within an hour of opening. Although around half the loss had been recouped by the early afternoon, the index of blue chip shares has declined by over 6% since the start of the week. The Nasdaq composite index of largely hi-tech shares fell to well below 2,000, a decline of 62% since last March. Several traders believe that US stock markets have further to fall. Art Hogan, chief market analyst at brokerage Jefferies & Co, said: "Nobody really feels in any great urgency to go back in and bottom fish." Robert Shiller, professor of economics at Yale University, pointed out that even after this week's declines, both the S&P and the Nasdaq were trading well above historic averages. In the 98 years to 1995, the S&P traded on an average price to earnings multiple of 14. Yesterday, the index was still trading at more than 20, according to Prof Shiller, who last year wrote Irrational Exuberance, about the stock market bubble. He said there was unlikely to be a specific catalyst for a continued slide. "The market doesn't need any news. All it needs is no further good news." Yesterday's economic data provided little good news. The University of Michigan's consumer sentiment index increased slightly to 91.8 from 90.6 in February. It showed that two-thirds of Americans believe the economy is in a recession. US wholesale prices, measured by the Producer Price Index, increased only 0.1% last month. Stripping out volatile food and energy costs, the PPI fell 0.3%, the steepest decline since a 1.2% drop in August 1993. Bruce Steinberg, chief economist at Merrill Lynch, said the figures showed "some evidence of the beginning of deflation pressure in the economy". Some of yesterday's volatility was caused by the so-called "triple witching" effect - a quarterly stock market event that sees the simultaneous expiration of futures, options and index contracts. _______________________________________________ CrashList website: http://website.lineone.net/~resource_base
