Family values gain during recession; cap on credit card rates could hurt; A2
Stock prices stabilized Monday in heavy but panic-free trading after the Dow Jones industrial average's fifth-sharpest decline in history Friday.The market's main barometer opened about 20 points higher, moved slightly lower and then stabilized in a narrow range.
Investors saw overseas stocks dive and then hold their ground in response to Wall Street's sudden drop on Friday, when the Dow fell 120.31 points to 2,943.20.
Overseas traders said the mood was not panicky following Friday's plunge. "It's a knee-jerk reaction," said Tokyo trader Mike Morizumi.
The mood in New York has been nervous after a run-up in stock prices over the past year. The Dow's dive evoked memories of October 1987, when the Dow fell 108 points on a Friday and collapsed a record 508 points in the next session, Black Monday.
However, economic conditions are different from four years ago. In addition, the NYSE has since instituted "circuit breakers" that temporarily halt trading if stocks fall too far, too fast.
After the opening bell, New York Stock Exchange Chairman William H. Donaldson was grinning broadly as he stared up at a video monitor and saw the Dow moving ahead.
Elsewhere on the trading floor, activity was quiet. Many issues were not trading because of imbalances between buy and sell orders. Workers expressed differing views on the outlook for the day.
"The mood looks good. It looks like a good day," said Freddy Gonzalez, a page from the exchange. "I don't think it's going to be a black Monday."
But others disagreed.
"There could be a lot of panic out there," said one worker from the floor of the exchange, who didn't want his name used.
The drop on Friday represented a 3.9 percent decline. It was the fifth-largest point drop.
Optimists in the United States thought it might now be time to go bargain-hunting. Pessimists wondered whether it was time to bail out.
Analysts said the drop was an acknowledgment by Wall Street that a recent round of lower interest rates is not curing the economy.
"It dramatizes the fact that we are not getting out of the recession," said Peter J. Canelo, chief investment strategist with County NatWest USA.
The catalyst for Friday's sell-off may have been a move in Congress to limit the interest banks can charge credit card holders. Banks said that would depress their earnings and lead them to cut off credit to many consumers, thereby pounding other parts of the economy.
To reassure the markets, Vice President Dan Quayle indicated Sunday that President Bush would veto such a measure.
After recovering from losses sustained in the wake of Iraq's invasion of Kuwait, the Dow reached several record highs and has spent most of this year trading above 2,850 - the mark seen as the market's psychological "bottom."