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Wall Street continues free fall

Markets keep tumbling, adding to last week's record point decline amid growing concern over Russia's crises.

4 min read
Wall Street continued to free-fall today with the Nasdaq market posting its largest single-day drop, battering technology and Internet stocks and beating last week's record point decline amid growing concern over Russia's economic and political crisis.

The Dow Jones Industrial Average plummeted 6.37 percent today to close at 7539.07, down 512.61 points. It was the second-largest one-day drop in the Dow's history.

The industrial index initially rose as much as 43.77 points this morning before stalling and plunging below the 8,000 mark for first time since January. Last week, the Dow plunged 481.97 points--a record in a calendar week. At its peak in July, the Dow hit 9337.97, up 18.1 percent for the year.

The technology-heavy Nasdaq had an even larger percentage drop today: a 8.56 percent decline, falling 140.43 points to close at 1499.25. The 52-week low for the Nasdaq is 1465.61, which it hit in January.

Jitters over Russia and lingering Asia concerns also sent most Asian and European markets falling.

Online traders reported that they generally able to handle the extra volume, although some firms reported delays in executing orders. (See related story) Some investors were turning to Internet chat rooms to discuss the stock market plunge, another upshot of the Net's growth. Much of the online conversation focused on the drubbing taken by technology stocks, as well as where the market was headed in the next week. Nobody could say for sure, although some analysts remained bullish that a rebound would occur.

The continued downturn on Wall Street is hitting technology stocks hard. Shares in the semiconductor sector suffered as much as a 13.68 percent declines. Cirrus Logic closed down 17.09 percent at 6.0625; Micron Technology closed 6.67 percent lower at 22.75; and Advanced Micro Devices was down 14.4 percent at 13. Chip giant Intel dropped 7.55 percent at 71.1875.

Computer makers also took a hit, with Dell Computer leading the way with a 15.79 percent decline to 100. Gateway was down 11.36 percent, to 47.31 while Apple Computer closed down 8.78 percent at 31.1875.

Net stocks, which had seemed immune to the market's downturn, nose-dived today.

"Internet stocks have been one of the last to be hit in terms of the correction in the market so far," said Miles Russ, an analyst at Wheat First Butcher Singer. "We are just starting to see [Internet stocks] getting hit in the last couple of days."

Book and music retailer Amazon.com plunged 20.91 percent to close at 83.75. Web portals Yahoo, Excite, and Lycos were registering double-digit dips. Yahoo fell 16.93 percent to 69; Excite fell 28.83 percent to 21.75, and Lycos fell 27.41 percent to 21.6875. Online auctioneer Onsale plunged to close down 21.23 percent to 14.3750. Netscape Communications also suffered, down 23.4 percent to 18.

"I would say the market this summer until now was better categorized as volatile," said Keith Benjamin, an analyst at BancAmerica Robertson Stephens. "This is a true correction which by definitions means it hits all stocks."

Russ pointed out that the popularity of Internet stocks has been buffered from the market's downturn by the press and euphoria surrounding key initial public offerings this summer, including the success of Broadcast.com and GeoCities.

"The joke that goes around is that any name with a '.com' after it has done incredibly well and that has held up Internet stocks," Russ added. "But now, we have gotten to a point where investors are finally very concerned about the overall state of the market and want to try to lock in some of the enormous profits they have had with Internet stocks."

In many cases, Net stocks have gone up more than tenfold, according to Russ. "Internet stocks are still giving a lot back to many investors."

This year, each time the market fell, investors looked at the decline as a buying opportunity. This correction, however, has been different. "For the first time in a while, we have seen retail [investors] in particular not wanting to buy on the dips," Benjamin said.

Many analysts point out that unlike the semiconductor and PC maker sectors, Net companies are not nearly as vulnerable to the misfortunes of the Asian economy because their revenue is from domestic sources.

"I think [Net stocks getting hit] was long overdue," Russ said. "There is probably going to be period of uncertainty, but once the markets starts to recover, Internet stocks will be the first to recover with it."

More bad news is coming out of Russia today. Its parliament rejected the appointment of Viktor Chernomyrdin as prime minister despite warnings from the Kremlin of a "people's uprising" and of economic collapse.

Germany's Dax was down 159.65, or 3.2 percent, to 4833.89. That country is Russia's biggest creditor and has the most to lose from the country's instability. London's financial markets were closed for a holiday today.

Asian stocks mostly fell today with Hong Kong's Hang Seng plunging 554.7 points to 7275, a 7.08 percent decline. Japan's Nikkei, however, rose 192.26 points to 14107.89.