Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest,americast.usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Tue, Oct 6 1992 Date: Tue, 6 Oct 92 05:45:32 EDT Message-ID: 10-05 0000 DECISIONLINE: Personal Investing USA TODAY Update Oct. 6, 1992 Source: USA TODAY:Gannett National Information Network STOCK MARKET BOUNCES BACK: Interest rate rumors took the market on a wild ride Monday. Fears that rates have stopped falling sent stocks into a skid, but they bounced back on hopes that rates still may be cut. The Dow Jones industrial average closed at 3179, down 21.61, after a wild morning session that sent the Dow plunging 105 points. More than 1 million shares a minute were traded during the morning session. (For more, see special Dow package below.) REBOUND `MAKES SENSE': Chief economist Richard Hoey of Dreyfus Monday said the plunge and rebound on the stock market Monday "makes perfect sense." There was speculation last week that the Fed and Germany might lower interest rates and the dollar would reverse to a bull trend. None of that happened. The reason the market didn't crash as it did in October 1987, according to Hoey: the Fed is lowering rates. MARRIOTT STOCK RISES: Shareholders got a sweet surprise Monday when Marriott Corp. decided to slice itself into two companies. In the middle of a market slump, Marriott stock rose 2 1:4 to $19 3:8, and analysts expect it to go higher. Next summer, any owner of one share of Marriott stock will become the owner of one share of Marriott International Inc. and one share of Host Marriott Corp. BONDHOLDERS' NEWS NOT GOOD: While Marriott shareholders were surprised Monday with a stock increase of 2 1:4 to $19 3:8 on news that the company will split into two companies, it's a different story for bondholders. The company's debt now will be repaid only for Host Marriott Corp.'s cash flow. Marriott insists Host is in no danger of defaulting on those bonds. TOLERANCE GUIDES SELL DECISION: How an investor should respond to the seemingly regular October nosedive of the stock market depends on many factors, experts say, including an individual's tolerance for risk and ability to absorb losses on paper. Monday's turmoil should prompt investors to re-evaluate stock holdings. Analyst Ed Nicoski is one who advises selling - he predicts the Dow may fall below 2900. DOW MIMICS OVERSEAS MARKETS: Stocks plunged Monday but recovered almost all of the loss in an astonishing afternoon rally. In the morning, the Dow dropped 3.3%, mimicking overseas markets. London's FTSE plunged 4% to 2446, its biggest one-day slide this year. In the afternoon, the Dow staged a phenomenal 83-point surge. One reason: NYSE officials imposed special restrictions on trading. SPECIAL PACKAGE ON DOW: PROBLEMS STILL REMAIN: A midday rebound saved the Dow from a 105-point plunge earlier Monday and relieved a shocked Wall Street, which has seen the Dow Jones industrial average drop 93 points - 3% - in three days. Despite the rebound, problems that sparked the dive remain. Key among them was the Fed's refusal to lower interest rates despite a September jobless report showing a slumping economy. GERMANY FAILS TO CUT RATES: Another factor affecting the market is Germany's failure to cut interest rates, meaning other European rates also could not fall. Stocks fell 4% in Great Britain, France and Germany. Analysts say investors should brace for more trouble. "There's just a mix of too many negatives boiling out there right now," says Jim Schroeder at MMS International. RATES MAY BE CUT BY THURSDAY: Stocks were shaky after losses last week. When the market opened Monday, "the rout was on," says Schroeder. But traders were hard pressed to explain the afternoon buying that lifted stocks. Ron Doran at C.L. King says some investors acted on rumors the Fed and Germany's central Bundesbank will lower interest rates by Thursday. If they don't, "that's a big problem," Doran says. (End of package.) GOLD CLOSES HIGHER: Prices for precious metals finished higher Monday. On the Commodity Exchange, gold bullion for current delivery rose $2.40 to $350.50. Republic National Bank quoted a late bid price of $350.50, up $2.25. Gold rose in London to $351.45, up from $348.15. Silver rose on the Comex to $3.749, up from $3.734. Silver rose in London to $3.80, up from $3.74. LONG-TERM BOND YIELDS RISE: The yield on 30-year Treasury bonds rose to 7.34% from 7.33% Monday. Light sweet crude oil dipped 15 cents to $21.77 a barrel on the N.Y. Mercantile Exchange as the United Nations approved actions to seize frozen Iraqi assets. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3179.00 Tuesday after closing down 21.61 Monday. The New York Stock Exchange composite opens at 224.14, down 1.67. The American Stock Exchange market value opens at 366.62, down 4.62. The NASDAQ OTC composite opens at 556.21, down 6.42. DOLLAR OPENS MIXED OVERSEAS: The dollar opens mixed on Tuesday. It opens at 0.5867 British pounds, up from 0.5784; 4.8115 French francs, down from 4.7625; 1.4140 German marks, down from 1.4235; and 119.60 Japanese yen, up from 119.40. (As of 3 p.m. Monday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY downdate (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM